annual report 2006-07

23rd Annual Report2006-2007

SpiceJet Limited

Board of Directors

Mr. Ajay Singh

Mr. Atul Sharma

Mr. B. S. Kansagra

Mr. Baljit Sobti (upto 24.05.2007)(alternate to Mr. R. S. Kansagra)

Mr. Hamed Ahmed Kazim (upto 14.03.2007)

Mr. Khaled Mohammad Ali Al Kamda (w.e.f. 24.05.2007)

Mr. Kishore Gupta

Mr. Mukkaram Jan

Mr. Osman Qureshi

Mr. R. S. Kansagra (upto 24.05.2007)

Mr. Siddhanta Sharma (Chairman)

Mr. Vijay Kumar

Compliance OfficerMr. A. K. MaheshwaryAssociate Vice President (Legal) & Company Secretary

Statutory AuditorsWalker, Chandiok & Co.L-41, Connaught CircusNew Delhi-110001

Bankers

CITI Bank N.A.HDFC Bank Ltd.HSBCICICI Bank Ltd.J&K Bank Ltd.State Bank of Bikaner & Jaipur

Registrars & Share Transfer AgentsKarvy Computershare Pvt. Ltd.Karvy House, 46, Avenue 4,Street no. 1, Banjara HillsHyderabad-500034

Registered OfficeCargo ComplexIndira Gandhi International AirportTerminal-INew Delhi-110037

Corporate Office319, Udyog ViharPhase-IV, Gurgaon, Haryana

Particulars Page No.

Notice 1

Directors’ Report 11

Management Discussion and Analysis 15

Corporate Governance Report 17

Auditors’ Report 29

Balance Sheet 34

Profit & Loss Account 35

Schedules 36

Balance Sheet Abstract 54

Cashflow Statement 55

Contents

23rd Annual Report 2006-20071

SpiceJet LimitedRegd. Office: Cargo Complex, Terminal-1, Indira Gandhi International Airport, New Delhi-110037

NOTICE

NOTICE IS HEREBY GIVEN THAT THE TWENTY THIRD ANNUAL GENERAL MEETING OF THESHAREHOLDERS OF SPICEJET LIMITED WILL BE HELD ON TUESDAY, THE 11TH DAY OF SEPTEMBER2007 AT 12 NOON AT SRI SATYA SAI INTERNATIONAL CENTRE, PRAGATI VIHAR, LODHI ROAD, NEWDELHI – 110003 TO TRANSACT THE FOLLOWING BUSINESS :

Ordinary Business

1. To consider and adopt the Balance Sheet as at March 31, 2007, Profit and Loss Account for the periodended on that date and the Reports of the Board of Directors and Auditors thereon.

2. To appoint a director in place of Mr. Atul Sharma, who retires by rotation and, being eligible, offers himselffor re-appointment.

3. To appoint a director in place of Mr. Kishore Gupta, who retires by rotation and, being eligible, offers himselffor re-appointment.

4. To appoint M/s Walker, Chandiok & Company, Chartered Accountants, retiring auditors, as the Auditors ofthe Company, who shall hold office from the conclusion of this Annual General Meeting until the conclusionof the next Annual General Meeting and to fix their remuneration.

Special Business

5. To consider and if thought fit, to pass, with or without modifications, the following resolution as an OrdinaryResolution:

“Resolved that Mr. Osman Qureshi, in respect of whom the Company has received a notice pursuant to theprovisions of Section 257 of the Companies Act, 1956 proposing his candidature to the office of director, beand is hereby appointed as director of the Company liable to retire by rotation.”

6. To consider and if thought fit, to pass, with or without modifications, the following resolution as an OrdinaryResolution:

“Resolved that Mr. Khaled Mohammad Ali Al Kamda, in respect of whom the Company has received anotice pursuant to the provisions of Section 257 of the Companies Act, 1956 proposing his candidature tothe office of director, be and is hereby appointed as director of the Company liable to retire by rotation.”

7. To consider and if thought fit, to pass, with or without modifications, the following resolution as a SpecialResolution:

“Resolved that pursuant to Section 31 and other applicable provision of the Companies Act, 1956, theArticles of Association of the Company be and are hereby altered, amended, changed and modified as perthe draft placed before this meeting.

Resolved further that the Board be and is hereby authorised to take all steps for giving effect to thisresolution including filing of these Articles of Association alongwith a copy of the amended Articles ofresolution with the concerned authorities.”



“Resolved that pursuant to the provisions of Section 81(1A), and all other applicable provisions, if any, ofthe Companies Act, 1956, (the Act), the Memorandum and Articles of Association of the Company, Securitiesand Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999 (hereinafter referred to as “SEBI Guidelines”) or any statutory modification(s) or re-enactmentof the Act or the SEBI guidelines, provisions of any other applicable laws or regulations and listingagreement(s) entered into by the Company with the stock exchanges where the securities of the Companyare listed and subject to such other approvals, permissions and sanctions as may be necessary andsubject to such conditions and modifications as may be prescribed or imposed while granting such approvals,permissions and sanctions and which may be agreed to and accepted by the Board of Directors of theCompany (hereinafter referred to as the Board, which term shall be deemed to include any Committee,including the Compensation Committee which the Board has constituted to exercise its powers, includingthe powers, conferred by this resolution), the consent of the Company be and is hereby accorded to theBoard to introduce “Employee Stock Option Scheme - 2007” (hereinafter referred to as the “ESOS -2007” or the “Scheme”) and to create, grant, offer, issue and allot at any time to or to the benefit of suchperson(s) who are in permanent employment of the Company, including any Director of the Company,whether whole time or otherwise, whether in India or not (hereinafter referred to as “the Employees”) optionsexercisable into not more than 6,016,250 equity shares of Rs.10 each of the Company in aggregate, in oneor more tranches, and on such terms and conditions as may be deemed fit by the Board in accordance withthe provisions of the law or guidelines issued by relevant authority(ies).

Resolved further that in case of any corporate action(s) such as rights issues, bonus issues, merger,demerger, amalgamation, sale of division and any other form of corporate restructuring, if any additionalequity shares are issued by the Company to the Option Grantees for the purpose of making a fair andreasonable adjustment to the options granted earlier, the above ceiling of 6,016,250 equity shares of Rs.10each shall be deemed to be increased to the extent of such additional equity shares issued in a mannerthat total value of the shares under the Scheme remains the same after the corporate action(s).

Resolved further that the Board be and is hereby authorised to issue and allot Equity shares upon exerciseof options from time to time in accordance with the Scheme and such Equity Shares shall rank pari passuin all respects with the then existing equity shares of the Company.

Resolved further that in case the equity shares of the Company are either sub-divided or consolidated,then the number of shares to be allotted and the price of acquisition payable by the option grantees underthe Scheme shall automatically stand augmented or reduced, as the case may be, in the same proportionas the present face value of Rs.10 per equity share bears to the revised face value of the equity shares ofthe Company after such sub-division or consolidation, without affecting any other rights or obligations ofthe said allottees.

Resolved further that the Board be and is hereby authorised to take necessary steps for listing of thesecurities allotted under the Scheme on the stock exchanges where the securities of the Company arelisted as per the provisions of the listing agreement(s) with the concerned stock exchanges, the guidelinesand other applicable laws and regulations.

Resolved further that the Board be and is hereby authorized to make modifications, changes, variations,alterations or revisions in the Scheme as it may deem fit, from time to time in conformity with the provisionsof the Companies Act, 1956, the Memorandum and Articles of Association of the Company, SEBI Guidelinesand any other applicable laws unless such variation, amendment, modification or alteration is detrimentalto the interests of the present and future employees of the Company.


Resolved further that for the purpose of giving effect to the above resolution, the Board be and is herebyauthorised to do all such acts, deeds, matters and things (including delegation of authority to officers ofthe Company) as it may, in its absolute discretion, deem necessary, expedient or proper and to settle anyquestions, difficulties or doubts that may arise in this regard at any stage including at the time of listing ofthe Securities without requiring further consent or approval of the shareholders of the Company.”


“Resolved that subject to approval of the Central Government and pursuant to the provisions of Section198, 269, 309, 310 read with Schedule XIII, and other applicable provisions, if any, of the Companies Act,1956 (including any statutory modifications or re-enactments thereof, for the time being in force), approvalof the Company be and is hereby accorded to appoint Mr. Siddhanta Sharma as a Whole-time Director ofthe Company to be designated as “Executive Chairman” with effect from the date upon which the approvalof Central Government is received upto March 31, 2009, on the terms and conditions, as set out in theService Agreement dated July 30, 2007 executed between the Company and Mr. Siddhanta Sharma on theremuneration set out below:

(i) Basic Salary: Rs.1,000,000 per month

(ii) Bonus: Performance bonus at the end of financial year 2008 as approvedby the Board of Directors.

(iii) Perquisites & Allowances: (a) Housing Rent: Rs.100,000 per month.

(b) Medical Reimbursement for actual expenses includinghospitalisation insurance.

(c) Leave Travel Concession at actuals for self, wife and onechild (by Business Class).

(d) Electricity charges at actuals at residence.

(e) Telephone expenses (including residence) at actuals.

(f) Provident Fund, Gratuity and leave encashment as perCompany rules.

(g) Provision for company maintained car with driver.

(h) Entertainment and credit card payments (business related).

(i) Employee Stock Option Scheme: One off lump sum grantand vesting of Options for 75,000 equity shares of theCompany.

Resolved further that in the absence of or inadequacy of profits in any financial year, the above remunerationwill be paid as minimum remuneration in terms of sub-section I (C) of Section II Part II of Schedule XIII ofthe Companies Act, 1956 (including any statutory modifications or re-enactments thereof, for the timebeing in force).


Resolved further that the Company Secretary, be and is hereby authorised to take appropriate action toapply for the approval of the Central Government to the appointment of and payment of remuneration to Mr.Siddhanta Sharma a Whole-time Director and take such steps as may be desirable to give effect to thisresolution.”

By order of the Board of Director

A. K. MaheshwaryAssociate Vice President

(Legal) & Company SecretaryPlace: Gurgaon, HaryanaDate: July 30, 2007

Notes :

1. Explanatory Statement, pursuant to section 173(2) of the Companies Act, 1956, in respect of businessunder item no. 5 - 9 is annexed hereto.

2. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead ofhimself and the proxy need not be a member of the Company. However, the instrument appointingproxy should be deposited at the Registered Office of the Company not less than forty-eight (48)hours before the commencement of the Annual General Meeting.

3. The Register of Shareholder and Transfer Books of the Company will remain closed from 10.09.2007 to11.09.2007 (both days inclusive).

4. Shareholders who hold shares in dematerialised form are requested to bring their client ID and DP IDnumbers for easy identification of attendance at the meeting.

5. All documents referred to in the accompanying Notice and Explanatory Statement are open for inspectionat the Registered Office of the Company during office hours on all working days, except Saturday/ Sundayand other holidays, between 1:00 p.m. and 3:00 p.m. upto the date of Annual General Meeting. A copy ofproposed amendments in the Articles of Association can be obtained through post by writing to the CompanySecretary at 319, Udyog Vihar, Phase-IV, Gurgaon-122016, Haryana.

6. Corporate shareholders/ Trusts/ Societies are requested to send a duly certified copy of the Board/ ManagingCommittee Resolution authorising their representative to attend and vote at the Meeting.

7. In case of joint holders attending the meeting, only such joint holder who is higher in the order of names willbe entitled to vote.

8. Shareholders desiring any information as regards the Accounts are requested to write to the Company inadvance so as to enable the Management to keep the information ready at the Annual General Meeting.

9. Shareholders are requested to carry their copy of Annual Report in the Meeting as the Annual Report willnot be distributed at the venue of AGM.

10. Re-appointment of Directors :At the ensuing Annual General Meeting Mr. Atul Sharma and Mr. Kishore Gupta retire by rotation and areeligible for re-appointment. Information pertaining to these directors in terms of Clause 49 of the ListingAgreement with Bombay Stock Exchange Limited is as follows :


a) Mr. Atul Sharma, aged about 51 years is a graduate in economics and law from Delhi University. He ishighly respected member of the legal profession in India, specializing in Corporate and Civil matters. He hasacted as consultant and advisor to various large Indian and multinational companies, Mr. Sharma wasappointed as director on the Board of the Company with effect from November 27, 2000. He is a member ofcompany’s Audit Committee. Mr. Sharma is also a director on the board of Axis IT&T Limited and a memberof its Audit Committee. Mr. Sharma does not hold any equity shares of SpiceJet Limited.

b) Mr. Kishore Gupta, aged about 47 years is a Science Graduate and fellow of the Institute of Cost andWorks Accountants of India. He practices in the field of business and corporate advisory by professionand has extensive experience in business management. Mr. Gupta was appointed as director on theBoard of the Company with effect from November 27, 2000. Mr. Gupta is a member of Company’sAudit Committee. Mr. Gupta is also a director on the board of Royal Holdings Services Limited. Mr.Gupta does not hold any equity shares of SpiceJet Limited.

The Explanatory Statement for item nos. 5 - 9 to the accompanying Notice set out hereinabove is as under.

ITEM NO. 5 AND 6In terms of the authority given by the shareholders at the extra-ordinary general meeting held on January 11,2007 and pursuant to the Subscription Agreement dated February 9, 2007, the Company made allotment of26,144,860 equity shares of Rs.10 each at price of Rs.52.69 per equity share to Istithmar PJSC (Istithmar). Theshareholders, while approving this subscription, also approved grant of certain rights to Istithmar, as finalisedin their Subscription Agreement. Accordingly, certain minority protection rights, including board representationwere provided to Istithmar. Subsequently Mr. Osman Qureshi and Mr. Khaled Mohammad Ali Al Kamda werenominated as directors on the Board by Istithmar subject to provisions of Section 260 of the Companies Act,1956 and Articles of Association of the Company, who shall be liable to retire by rotation and further subject toremoval by Istithmar. Mr. Qureshi and Mr. Kamda hold office only upto the date of forthcoming Annual GeneralMeeting of the Company and are eligible for appointment as directors. The Company has received noticesunder Section 257 of the Companies Act, 1956, in respect of both the candidates, proposing their appointmentas directors of the Company, alongwith the requisite deposit.

(a) Mr. Osman Qureshi aged about 40 years holds a Master’s degree in Political Science from ColumbiaUniversity and a Bachelor’s in History and Government from Lafayette College. He has over twelve yearsof private equity and investment banking experience and has previously worked for Emerging MarketsPartnership, Lehman Brothers and CS First Boston. Mr. Qureshi was appointed on the Board of the Companywith effect from March 14, 2007. Mr. Qureshi is also a Managing Director of Istithmar. Mr. Qureshi does nothold any equity shares of SpiceJet Limited.

(b) Mr. Khaled Mohammad Ali Al Kamda aged about 47 years holds a Master’s degree in BusinessAdministration from the Cranfield School of Management. Mr. Al Kamda has held various senior managementpositions during his 21 year career. Mr. Al Kamda was previously a Senior Vice President of CorporateDevelopment for Emirates Group, where he was responsible for the company’s mergers and acquisitions,foreign investments, and joint ventures. Prior to that, Mr. Al Kamda was a Senior General Manager atEmirates Airlines where he was responsible for all the commercial activities of the company for MiddleEast, Africa and the Commonwealth of Independent States (CIS). Furthermore, Mr. Al Kamda has servedas Chairman of the Board of Directors of Emirates Hotels and Resorts, Chairman of Dubai Express FreightWorks, and Board Manager of Arab Air Carriers Organization. Currently, he is the Vice Chairman of theBoard of Directors of Tamweel, Dubai Islamic Bank, Nakheel, Limitless, Dubai Maritime City, DubaiInvestments Park, and Emirates Post. Mr. Al Kamda was appointed on the Board of the Company witheffect from May 24, 2007. Mr. Al Kamda does not hold any equity shares of SpiceJet Limited.

The Directors recommend the resolutions for your approval.

None of the Directors of the Company, except Mr. Osman Qureshi and Mr. Khaled Mohammad Ali Al Kamdaare in any way concerned or interested in the resolution.


ITEM NO. 7Amendments in the Articles of Association of the Company were approved by the members in the Extra-ordinaryGeneral Meeting held on September 30, 2005 giving customary minority protection rights including board representationand corporate governance covenants to enable private equity investment by Istithmar PJSC (Istithmar) in the Companypursuant to Shareholders and Subscription Agreement dated October 13, 2005. Istithmar made further equity investmentin the Company pursuant to Subscription Agreement dated February 9, 2007 for issue and allotment of 26,144,860equity shares. This new Subscription Agreement dated February 9, 2007 replaced the earlier agreement dated October13, 2005 entered into with Istithmar. Consequently, the Articles of Association of the Company require furtheramendments to incorporate rights provided to Istithmar under the above mentioned new agreement.

The Directors recommend the resolution for your approval.

None of the Directors of the Company, except Mr. Osman Qureshi and Mr. Khaled Mohammad Ali Al Kamda, tothe extent as nominees of Istithmar on the Board of the Company, are in any way concerned or interested in theresolution.

ITEM NO. 8Your Company recognizes the critical role human capital plays in growth of the Company. Towards this, it isproposed to introduce the “Employee Stock Option Scheme-2007” (hereinafter referred to as the “ESOS-2007”or the “Scheme”) subject to the approval of the shareholders and the provisions of the Securities and ExchangeBoard of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, asamended (the “SEBI Guidelines”). The Board of Directors of your Company has constituted a CompensationCommittee comprising of a majority of independent directors to formulate, implement and administer the ESOS-2007 in accordance with the SEBI Guidelines and other applicable regulations.

The approval of the shareholders is, therefore, being sought for issue of stock options to the employees of yourCompany under ESOS-2007.

The main features of the ESOS-2007 are as under:

(a) Total number of options to be grantedA total of 6,016,250 options shall be available for being granted to the Employees of the Company underthe Scheme. The detailed terms of grant shall be formulated by the Board of Directors of the Company (the“Board” which expression includes any Committee thereof, including the Compensation Committee) andshall be subject to broad parameters of the Scheme to be approved by the shareholders. Each option whenexercised will be converted into one equity share of Rs.10 each fully paid-up of your Company.

Lapsed vested options due to non-exercise or cancelled unvested options due to resignation of the employeesor otherwise, will be available for re-grant at a future date. SEBI Guidelines require that in case of anycorporate action(s) such as rights issues, bonus issues, merger, demerger, amalgamation, sale of divisionand any other form of corporate restructuring, a fair and reasonable adjustment needs to be made to theoptions granted. Accordingly, if any additional equity shares are issued by the Company to the OptionGrantees for making such fair and reasonable adjustment, the ceiling of 6,016,250 equity shares of Rs.10each shall be deemed to be increased to the extent of such additional equity shares issued in a mannerthat total value of the shares under the Scheme remains the same after the corporate action(s).

(b) Identification of classes of employees entitled to participate in the Employee Stock Option Scheme.All permanent employees of the Company, including the Directors, as may be decided by the CompensationCommittee from time to time, would be entitled to be granted stock options under the Scheme. However thepromoters or persons belonging to the promoter group of the Company shall not be eligible under the Scheme.

(c) Requirements of vesting and period of vestingThere shall be a minimum period of one year between the grant of options and vesting of options. TheOptions granted shall vest so long as the employee continues to be in the employment of the Company or


Director continues as such. The Compensation Committee may, at its discretion, lay down certain criteriaincluding, but not limited to, performance metrics on the achievement of which the granted options wouldvest, the detailed terms and conditions relating to such criteria for vesting and the proportion in whichoptions granted would vest subject to the minimum vesting period as specified above.

The stock options granted to an employee/ director will not be transferable to any person and shall not berenounced, pledged, hypothecated, mortgaged or otherwise alienated in any manner. However, in the eventof the death of an employee/ director, all the options granted to him till such date shall vest in legal heirsor nominees of the deceased employee/ director.

(d) Maximum period within which the options shall be vestedThe options would vest not later than five years from the date of grant of options. The exact proportion inwhich and the exact period over which the options would vest would be determined by the CompensationCommittee, subject to the minimum vesting period of one year from the date of grant of options.

(e) Exercise PriceThe option would be granted at an exercise price of Rs.30 per equity share or such other price as may bedecided by the Compensation Committee.

(f) Exercise Period and the process of ExerciseThe Exercise period would commence from the date of vesting and will expire on completion of five yearsfrom the date of vesting of options.

The options will be exercisable by the Employees by a written application to the Company to exercise theoptions in such manner, and on execution of such documents, as may be prescribed by the CompensationCommittee from time to time. The options will lapse if not exercised within the specified exercise period.

(g) Appraisal Process for determining the eligibility of the employees to ESOS-2007The appraisal process for determining the eligibility of the employees will be specified by the CompensationCommittee, and will be based on criteria such as role/ level of the employee, past performance record,future potential of the employees, balance number of years of service until normal retirement age and/orsuch other criteria that may be determined by the Compensation Committee at its sole discretion.

(h) Maximum number of options to be issued per employee and in aggregateThe number of options that may be granted to an employee under the Scheme shall not exceed 1% of the issuedequity capital (excluding outstanding warrants and conversions) of the Company at the time of grant of options.

(i) Disclosure and Accounting PoliciesThe Company shall comply with the accounting policies prescribed under Clause 13.1 of the SEBI Guidelinesand all other disclosure requirements and accounting policies prescribed as per the SEBI Guidelines andother applicable laws and regulations.

(j) Method of option valuationTo calculate the employee compensation cost, the Company shall use the Intrinsic Value Method forvaluation of the options granted.

The difference between the employee compensation cost so computed using Intrinsic Value and the costthat shall have been recognized if it had used the Fair Value of the options, shall be disclosed in theDirectors’ Report and also the impact of this difference on profits and on EPS of the Company shall bedisclosed in the Directors’ Report.

As the Scheme provides for issue of shares to be offered to persons other than existing shareholders of theCompany, consent of the shareholders is being sought pursuant to Section 81 (1A) and all other applicableprovisions, if any, of the Act and as per Clause 6 of the Securities and Exchange Board of India (EmployeeStock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

The Options to be granted under the ESOS-2007 shall not be treated as an offer or invitation made to the publicfor subscription in the securities of your Company.


None of the Directors of the Company are in any way, concerned or interested in the resolution except to theextent of securities that may be offered to them under the Scheme.

ITEM NO. 9Salient terms and condition of the Service Agreement dated July 30, 2007 between the Company and Mr. Siddhanta Sharma are as under:

(1) Period of Appointment With effect from the date upon which the approval of Central Governmentis received upto March 31, 2009.

(2) Details of remuneration As provided in the resolution.

(3) Termination � Termination: Six months notice from either side.

� Early Termination: All payments to be made till December 31, 2008 ifterminated by the Company prior to December 31, 2008.

(4) Duties Shall perform such duties as from time to time be entrusted to him by theBoard and exercise the powers and functions which from time to timefollow by virtue of his designation as the Executive Chairman.

The information required in terms of Schedule XIII of the Companies Act, 1956 is as under:

I General Information:

(1) Nature of Industry Aviation

(2) Date of commencement of May 23, 2005commercial operations

(3) Financial performance based on given Ten months Quarterindicators (Rs. In million except EPS) ended ended

31.03.2007 30.06.2007(Audited) (Un-audited)

Total Revenue 7,482.79 3,114.17

Net Profit (707.43) 185.35

EPS (3.72) 0.77

(4) Export performance and net foreign For the period ended March 31, 2007, the Company hadexchange collaborations foreign exchange earnings of Rs.1,020.83 million and has

no foreign collaboration.

(5) Foreign investments or collaborators, Total Foreign Direct Investment in the Company as onif any July 30, 2007 is Rs.3,041 million (including premium of

Rs.2,254 mil l ion). The Company has no foreigncollaborator.


II Information about the appointee

(1) Background details Mr. Siddhanta Sharma is a Science Graduate, FellowMember of the Institute of Chartered Accountants of Indiaand an Associate of the Institute of Company Secretariesof India. He has held senior key positions in variousreputed Indian and Multi-National Corporation. He hasbeen on the Board of Directors of the Company sinceMarch 2001 and has been the Chairman of the Board since2002. He has also been a member of Audit Committee,Share Transfer and Investors’ Grievance of the Company.

Mr. Sharma has played a key role in negotiating with verylarge number of creditors who had filed winding up petitionsagainst the Company which helped in re-launch ofcommercial operations of the Company in May 2005 underthe name of SpiceJet.

Mr. Sharma has also been instrumental in inviting reputedoverseas consultants to build a successful low cost airlinemodel for the Company.

Prior to joining the Company, Mr. Sharma has beenresponsible for setting various green fields ventures in Indiafor multinationals engaged in variety of businesses. Thisincludes setting up of a Greenfield distillery for Allied Domecqplc of UK and setting up of logistic chain for supply ofpremium commodities for a large UK based company.

(2) Past remuneration Nil from the Company

(3) Recognition or awards � Award for Excellence for setting up a Greenfielddistillery of global standards, awarded by theChairman of Allied Domecq plc, United Kingdom.

� Award for Excellence for enhancing the image of Indiaas “Bhartiya Shiromani Puraskar” awarded by theInstitute of Economic Studies.

� Nomination by NDTV for best start up airline.

� Certificate of Appreciation from 4Ps Business andMarketing Magazine

(4) Job profile and suitability In the absence of Managing Director/ Manager, theExecutive Chairman shall be responsible for substantialmanagement of the Company subject to thesuperintendence, control and direction of the Board ofDirectors.The Board of Directors of the Company is ofthe view that Mr. Sharma is a suitable candidate for theproposed position.

(5) Remuneration proposed As provided in the resolution.

(6) Comparative remuneration profile with As per information available for the year ended March 31,respect to industry, size of the Company, 2006, the salary range for CEO/ COO/ VP-Engineering/profile of the position and person VP-Operations of country’s largest private sector airline

is Rs.13.5 million – Rs.16.7 million per annum.TheCompany had a turnover of Rs.7,482 million for 10 months


period ended March 31, 2007 which is likely to increase toapprox. Rs. 14,000 million for the financial year 2007-08.The Company presently employs over 1900 employees andflies around 350,000 passengers per month.The proposedposition will be to head operations of the Company. Profileof Mr. Siddhanta Sharma has already been detailed above.Further, several highly qualified employees shall be reportingdirectly into the Executive Chairman.

(7) Pecuniary relationship directly or None.indirectly with the Company, ofrelationship with the managerialpersonnel, if any

III Other Information

(1) Reasons of loss or inadequate profit � Start-up airline coupled with rising fuel cost whichaccounts for 40-45% of the operating cost.

� Mass entry of new operators due to which the airlineis forced to operate at low yields.

(2) Steps taken or proposed to be Reduction and optimization of operational costs besidestaken for improvement aiming for critical mass of operation.

(3) Expected increase in productivity Our unit cost is expected to be lower than theand profits in measurable terms previous year by 14% due to increase in the fleet size

and various measures taken for cost control. Also therehas been an increased focus to increase ancillary revenuefrom 1.6% to 3-4% of passenger revenue. Our passengeryields are expected to increase due to selection of highyield sectors after taking into consideration our historicaldata for all route performance.


None of the Directors of the Company except Mr. Siddhanta Sharma are in any way, concerned or interested inthe resolution.

The terms of appointment of Mr. Siddhanta Sharma, as stated in this notice, may be treated as the abstractunder Section 302 of the Companies Act, 1956. The copy of Service Agreement dated July 30, 2007 betweenthe Company and Mr. Siddhanta Sharma in respect of the appointment is available for inspection by membersat the registered office of the Company during working hours on any working day.

By order of the Board of Director

A. K. MaheshwaryAssociate Vice President

(Legal) & Company Secretary

Place: Gurgaon, HaryanaDate: July 30, 2007


DIRECTORS’ REPORT

Dear Shareholders,

The Directors hereby present the Twenty Third Annual Report and the Audited Accounts for the period endedMarch 31, 2007.

1. Financial Results(Amount in Rs. Million)

Particulars March 31, 2007 May 31, 2006

Gross Income 7,482.79 4,519.80

Operating Expenses 6,441.10 3,783.73

Employee Remuneration and Benefits 855.00 479.73

Selling Expenses 279.56 231.74

Administrative and other Expenses 469.84 361.14

Finance Charges 42.65 41.64

Depreciation 58.47 81.58

Profit/ (Loss) before taxation (663.82) (459.76)

Prior Period Adjustments (33.67) 58.68

Fringe Benefit Tax (9.94) (13.12)

Profit/ (Loss) after taxation (707.43) (414.20)

Total revenue of your company for the period under review registered a robust growth of 121% at Rs.7,482.79million versus Rs.3,387.93 million for comparable period of 10 months of previous financial year, (Rs.4519.80million in 12 months of financial year 2005-06.

On operating levels, the Company reported an income of Rs.6404.44 million and operating expenses ofRs.6441.10 million in spite of the fact that the reporting period does not include two peak travel months ofApril and May.

Explanations to various comments made by the Auditors in their Report to the shareholders are mentionedin the Notes to the Accounts, which forms part of the Balance Sheet for the ten month period ended March31, 2007.

2. BusinessThe Company completed its second year of operations on May 23, 2007. During its second year of operations,the Company grew its fleet size to eleven aircraft covering 14 destinations and operating 83 flights daily.During the ten months period ended March 2007, the number of passengers flown has also increased by95% to 2.61 million compared to 1.34 million in comparable previous period. The average load factor of77% was recorded by the airline during the period under review with a market share of over 8%.

During the period under review, the Company doubled its average deployed fleet to 8.17 aircrafts versus4.08 aircrafts for comparable previous year.


Apart from concentrating on the core revenue operations, your company has also initiated processes togenerate ancillary revenues which in turn would reduce cost of operations. All through the period theprimary focus of your airline has been cost reduction so as to extend maximum benefits to its passengersand stakeholders. The company has managed to improve the Net Revenue/ passenger to Rs.2,320 fromRs.2,209 in comparable previous year.

On positive feedback of passengers, your company has started sale of food on board. The Company hasalso integrated with Tata AIG Insurance Company Limited to commence travel insurance sales which waslaunched during May 2007.

3. Change of Financial Year and Accounting TreatmentThe Board of the Company decided to change the financial year of the Company from June-May to April-March. Accordingly, the current financial results reflect the performance of the Company for ten monthsonly and may not be comparable with full year results for the period ended May 31, 2006.

The Company has incorporated few changes in accounting policies during the period under review, detailsof which are as follows:

a) Leasehold Improvement of Aircrafts, classified under Fixed Assets, were fully written off, due to whichlosses are higher by 80.78 million.

b) Pilot Licence Fee, classified under Deferred Revenue Expenditure, were fully charged of to Employeecosts, due to which Employee costs and Losses are higher by 99.52 million.

c) Free of Charge spares, classified under Unearned Incentives, were taken to Profit and Loss Accountas one time credit, due to which Losses are lower by 87.50 million.

4. Employee Stock Option Scheme - 2007The Company understands critical role employees play in growth of the Company and feels that the valuecreated by its employees should be shared with them and to promote the culture of employee ownership inyour Company, the Board of Directors of the Company decided to introduce the ‘Employee Stock OptionScheme-2007 (ESOS 2007)’ subject to the approval of the shareholders and the provisions of the Securitiesand Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999, as amended. The Board of the Company has constituted a Compensation Committeecomprising majority of independent directors to formulate, administer and implement the ESOS-2007 inaccordance with the SEBI Guidelines and other applicable regulations.

5. Fleet ExpansionDuring the period under review the Company inducted five new aircraft to its fleet taking the total fleetstrength to eleven aircraft. The airline plans to add eight more aircraft to its fleet by the end of year 2007.

During the month of April 2007, the Company has also exercised its option to purchase additional tenaircraft from the Boeing Company taking its total order size with Boeing to thirty aircraft. The aircraft arescheduled to be delivered during the year 2008 through 2011.

6. Increase in Share CapitalDuring the period under review, the Company made a preferential issue to Tata group, BNP Paribas, IstithmarPJSC and KBC Financial Products aggregating to 56,312,290 equity shares of Rs.10 each at a premium ofRs.42.69 per share. The Company raised over Rs.2,967 million through this preferential issue which will beutilised to fund the expansion program of the Company and its working capital requirements.

7. DividendIn view of losses during the period under review, your Directors do not recommend any dividend.

8. DirectorsMr. Atul Sharma and Mr. Kishore Gupta retire by rotation in the forthcoming Annual General Meeting and,being eligible, offer themselves for re-appointment.


Mr. Osman Qureshi and Mr. Khaled Mohammad Ali Al Kamda were appointed as additional director on theBoard of the Company as nominees of Istithmar PJSC and shall hold office upto the date of ensuing annualgeneral meeting. The Company has received notices under Section 257 of the Companies Act, 1956 proposingtheir candidature.

Mr. Siddhanta Sharma is proposed to be appointed as Whole-time Director, to be designated as ExecutiveChairman, with effect from the date of approval of the Central Government. An apporpriate resolution tothis effect is being placed for approval of shareholders in the forthcoming Annual General Meeting.

9. PersonnelInformation as required under the provisions of Section 217 (2A) of the Companies Act, 1956, read withCompanies (Particulars of Employees) Rules, 1975 as amended, forms part of this report. However, as perprovisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent toall the shareholders excluding the statement of particulars under Section 217 (2A). The Statement is openfor inspection at the registered office of the Company during working hours and a copy of the same may beobtained by writing to the Company at its registered office.

10. Directors’ Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representationsreceived from the operating management, confirm:

i. that in the preparation of the accounts for the period ended March 31, 2007, except otherwise disclosed,the applicable accounting standards have been followed along with proper explanation relating to materialdepartures;

ii. that except otherwise disclosed in the Notes to the Accounts, they have selected such accountingpolicies and applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at the end of reviewperiod and of the profit or loss of the Company for that period;

iii. that, except otherwise disclosed in the Notes to the Accounts, they have taken proper and sufficientcare for the maintenance of adequate accounting records in accordance with the provisions of theCompanies Act, 1956 for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

iv. that they have prepared the accounts for the period ended March 31, 2007 on a going concern basis.

11. Conservation of Energy & Technology AbsorptionParticulars as required under section 217(1) (e) of the Companies Act, 1956, relating to conservation ofenergy and technology absorption are not applicable for the year under review, and hence not furnished.

12. Foreign Exchange Earnings & OutgoThe Company had foreign exchange earnings of Rs.1,020.83 million while the outgoings were Rs.2,427.60million during the period under review.

13. Deposits/ BorrowingsThe Company has not accepted any deposit under provisions of Section 58A of the Companies Act, 1956during the period under review.

14. AuditorsM/s Walker Chandiok & Co., auditors of the Company will retire at the forth coming Annual General Meeting.The Company has received letter from them to the effect that their appointment, if made, would be withinthe prescribed limits under Section 224 (1-B) of the Companies Act, 1956. On recommendation of the AuditCommittee, the Board in its meeting held on May 24, 2007 proposed their name for re-appointment. You arerequested to consider their appointment.


15. Corporate GovernancePursuant to Clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd., ManagementDiscussion and Analysis, Corporate Governance Report and Auditors’ Certificate regarding Compliancewith the Code of Corporate Governance are made part of the Annual Report.

16. Information as required under the listing agreementShares of the company are presently listed at Bombay Stock Exchange Limited, P. J. Towers, Dalal Street,Mumbai and the company has paid listing fee upto March 31, 2008 in respect of above stock exchange.

17. AcknowledgementThe Directors thank all government, regulatory bodies and shareholders for their consistent support in theprocess of successful launch and smooth airline operations of the Company. The Directors also sincerelyacknowledge the dedication and commitment of Company’s staff at all levels, without whom the Companywould not have attained such great heights within two years of its operations.

For and on behalf of the BoardSd/-

Siddhanta SharmaChairman

Place: Gurgaon, HaryanaDate: July 30, 2007


MANAGEMENT DISCUSSION AND ANALYSIS

Business review

The Company had a fleet of five aircraft at the start of the fiscal, which was scaled up to 11 aircraft by thefiscal end. All the six new aircraft acquired are the new generation Boeing 737 – 800. The airline carried over2.61 million guests during June 2006 to March 2007, and enjoyed a market share of over 8%. The ethos of theCompany is to offer lowest air fares to its guests and provide safe, reliable and quality service of flying thembetween two points.

SpiceJet currently operates 83 flights daily to 14 destinations, offering connectivity between metros and non-metros. The Company boasts of Flight Dispatch Reliability of 99.5% which is higher than the Boeing globalaverage.

Strengths

Following a typical Low Cost Carrier (LCC) business model, on the lines of the most successful LCCs globally,SpiceJet boasts of having the lowest cost per unit amongst Indian LCCs. This has been achieved by maintaininga standard aircraft type (B737 – 800) with identical seat configuration in a single cabin, engines and othermaintenance equipment. Hence commonality of aircraft spares and training for crew and engineers alsosubstantially contributes to reduced costs. It is this cost advantage that we pass on to our customers for themto avail of our consistent and year round low fares.

SpiceJet has partnered some of the best names globally like Honeywell, Weber Seats, etc. All this ensures animpeccably well maintained fleet which therefore results in highest safety standards, besides an on-timeperformance record which is amongst the best in the Indian skies.

SpiceJet has invested heavily into IT towards delivering best in class service levels to its customers andpartners, as also providing the Management with MIS and other inputs, which in turn facilitate to deliver thebest end product/ service. For our Reservations, Call centre and Departure Control System we subscribe to thestate-of-the-art Navitaire system, used by most successful LCCs globally.

Our aircraft utilization is amongst the highest in India, while the turn-around time at airports is the lowest. Thisdelivers efficiencies resulting in excellent asset management.

Competition and Threats

There are three major threats to the entire aviation industry in India; a) Much higher capacity than demand; b)Fuel prices, and c) Airport infrastructure.

Currently there are eight scheduled airlines in the domestic market in India, four of which are LCCs includingSpiceJet. The full service carriers are also competing on low fares with the LCCs since the demand-supplyimbalance is getting worse every month.

Most airlines are operating below cost, and hence their financial results - which are in the red. This in turn putsmore pressure on yields, thereby causing all airlines to lower fares beyond the threshold levels.

Yet another area of concern is the infrastructural constraints at major airports. There are practically no slots (forlanding/take-off of aircraft) available at these airports for any new services to be launched. Hence the connectivityto these airports suffer, besides inconveniencing our aircraft rotations.

For existing services there is terrible traffic congestion leading to increased fuel spend and an increased andwasteful aircraft utilization.


Opportunity and Outlook

With domestic air travel having grown 42% over the last one year, which is the highest recorded anywhere in theworld, the forecast for air travel in India is robust – likely to grow 25% year-on-year for the next 3 years. Thistherefore means excellent demand, which has been induced primarily by low cost airlines enticing train travellers tofly at similar fares. However, the supply of air capacity is exceeding demand. The total increase in domesticcapacity being added every month is 3.5 aircraft until end of 2007; thus exceeding demand by 10%. The economiccycle in such a scenario typically drives towards consolidation in any industry – something India has recentlywitnessed by way of merger of two private full service carriers and also two state owned full service carriers. Whilethese are positive indicators of a maturing industry, more must happen for all existing players to remain profitable inthe long run.

Spicejet, having a fundamentally sound business model, is heading towards a break-even during Quarter 1 of2007-08 financial year – the 1st by any new entrant in India. SpiceJet will add 8 brand new aircraft to its fleet of11 by March 2008. These will include five B737-900ER aircraft with a seat capacity of 212. This aircraft will bethe largest capacity aircraft in the Indian domestic skies. The next rounds of confirmed aircraft acquisitions willhappen during April 2008 thru March 2011, by when the total fleet strength will stand at 35 aircraft, with anoption of 10 more.

The fact that this kind of expansion has been planned, despite the current competitive environment in India, asoutlined above, only goes to prove the absolute control on costs and best management practices that SpiceJetfollows.

Human Resources

This has been a year where the challenges of recruiting large number of frontline operation staff were met on time,with the coming of several new aircraft. This was achieved despite the demand for such Talents having spiked quitesuddenly and the resultant shortage. The Company today has 1850 employees.

The industry was witness to attrition across companies and across levels of more than 30% where SpiceJet wasable to maintain a level of attrition of about 19% across levels, for the full year. It was also a year of consolidationfor the Company where several processes alongwith certain parts of Organisation and Compensation structureswere reviewed and streamlined keeping in mind long term sustainability and rigour. Employee events around EmployeeEngagement and communication initiatives were intensified and Organisation-wide initiative carried out for aligningOrganisation Vision and bringing about a performance focus. During this period an introduction was done to VariablePay in the pay structure of certain functions, as a first step to eventually introducing it across the Company.


CORPORATE GOVERNANCE

1. Brief Statement on Company's Philosophy on Code of Corporate Governance

The Company believes in adopting best corporate practices for ethical conduct of business. In its stridefor achieving the best corporate governance, the Company has already formed the mandatory committeesas required under Companies Act, 1956/ listing agreement.

2. BOARD OF DIRECTORS

(a) CompositionThe policy of the company is to have an appropriate mix of independent and non-independent directorsto maintain the independence of the board. During the financial period 2006-07, the board consistedof all non-executive directors. The Board of Directors of the Company consisted of following directorsas on March 31, 2007, categorised as indicated:

Category Name of Director

Chairman Mr. Siddhanta Sharma

Promoter Nominee Mr. B. S. KansagraMr. R. S. Kansagra

Independent Mr. Kishore GuptaMr. Mukkaram JanMr. Vijay Kumar

Investor Nominee Mr. Osman Qureshi(representing Istithmar PJSC)

Non-Independent Mr. Ajay SinghMr. Atul Sharma

Alternate Mr. Baljit Sobti (alternate to Mr. R. S. Kansagra)

Notes:

1. Mr. R. S. Kansagra and Mr. Baljit Sobti have ceased to be directors in the Company with effect from May 24, 2007.

2. Mr. Khaled Mohammad Ali Al Kamda was appointed as nominee director of Istithmar PJSC with effect from May 24, 2007.

3. Mr. Siddhanta Sharma, who was earlier non-executive director, has been appointed as a Whole-time Director and

designated as Executive Chairman at the Board Meeting held on July 30, 2007. This appointment is subject to

approval of the Central Government and will be effective from the date of such approval.

(b) Number of Board MeetingsThe Board meets at least once a quarter to review the quarterly results and other items on theagenda and also on the occasion of the annual general meeting. During the period under review,eleven (11) board meeting were held on June 27, 2006; August 2, 2006; September 25, 2006; September29, 2006; October 27, 2006; December 11, 2006; December 29, 2006; January 11, 2007; February 9,2007; March 14, 2007 and March 30, 2007.


The table below sets out details of attendance, other directorships, committee memberships/chairmanships of directors :

Name of Director Attendance No. of directorships and committeememberships/ chairmanships

Board Last Other Committee CommitteeMeetings AGM directorships1 memberships Chairmanships

Mr. Ajay Singh 5 Absent 3 - 1

Mr. Atul Sharma 10 Present 1 3 -

Mr. B. S. Kansagra 4 Absent 14 1 -

Mr. Baljit Sobti2 2 Absent 2 - -

Mr. Hamed Ahmed Kazim3 - Absent - - -

Mr. Kishore Gupta 11 Present 1 2 -

Mr. Mukkaram Jan 1 Absent 16 - 2

Mr. Osman Qureshi3 5 Absent 1 - -

Mr. R. S. Kansagra2 - Absent 12 - -

Mr. Siddhanta Sharma4 11 Present 1 2 -

Mr. Vijay Kumar 1 Absent 1 1 -

Notes:

1. Includes directorship in foreign / private companies other than the Company.

2. Mr. R. S. Kansagra ceased to be director with effect from May 24, 2007 and accordingly Mr. Baljit Sobti, alternate to Mr.

R. S. Kansagra, has also ceased to be a director.

3. Mr. Hamed Ahmed Kazim ceased to be director of the Company with effect from March 14, 2007. Upto March 14, 2007Mr. Osman Qureshi was acting as alternate to Mr. Hamed Ahmed Kazim and all Board meetings attended by Mr. Osman

Qureshi during the period under review were in his capacity as alternate to Mr. Hamed Ahmed Kazim.

Mr. Osman Qureshi has now been nominated by Istithmar PJSC as its representative with effect from March 14, 2007.

4. Mr. Siddhanta Sharma, who was earlier non-executive director, has been appointed as a Whole-time Director anddesignated as Executive Chairman at the Board Meeting held on July 30, 2007. This appointment is subject to approval

of the Central Government and will be effective from the date of such approval.

(c) Board ProcedureThe Agenda for the Board Meeting is circulated in advance to the Board members. The items in theAgenda are supported by comprehensive background information to enable the members takeappropriate decisions. In addition to information required under Annexure 1A to Clause 49 of thelisting agreement, the Board is also kept informed of major events/ items and approvals are takenwherever necessary. The Chairman at the Board keeps the Board apprised of overall performance ofthe Company.

(d) Code of ConductThe Company has formulated and implemented the Code of Conduct (the Code) for board membersand senior management persons. The Code has been posted on the website of the Company. All theBoard members and senior management persons have affirmed compliance with the Code. A declarationto this effect signed by CEO/ CFO with regard to the Code forms part of CEO/ CFO certificationwhich is provided elsewhere in the Annual Report.


(e) Transactions with non-executive DirectorsThe Company made a payment of Rs.4.6 million to Link Legal, Advocates towards legal andprofessional charges during the period under review in which Mr. Atul Sharma is a partner.

No remuneration was paid to any of the directors during the period ended March 31, 2007.

However, Mr. Siddhanta Sharma, who was earlier non-executive director, has been appointed as aWhole-time Director and designated as Executive Chairman at the Board Meeting held on July 30,2007. This appointment is subject to approval of the Central Government and will be effective fromthe date of such approval. The table below sets out the details of remuneration proposed to be paid tohim :

(i) Basic Salary : Rs.1,000,000 per month

(ii) Bonus : Performance bonus at the end of financial year2008 as approved by the Board of Directors.

(iii) Perquisites & Allowances : (a) Housing Rent: Rs.100,000 per month.

(b) Medical Reimbursement for actual expensesincluding hospitalisation insurance.

(c) Leave Travel Concession at actuals for self,wife and one child (by Business Class).

(d) Electricity charges at actuals at residence.

(e) Telephone expenses (including residence) atactuals.

(f) Provident Fund, Gratuity and leaveencashment as per Company rules.

(g) Provision for company maintained car withdriver.

(h) Entertainment and credit card payments(business related).

(i) Employee Stock Option Scheme: One offlump sum grant and vesting of Options for75,000 equity shares of the Company.

(iv) Period of Appointment: With effect from the date upon which the approvalof Central Government is received upto March 31,2009.

(v) Termination: � Termination: Six months notice from eitherside.

� Early Termination: All payments to be madetill December 31, 2008 if terminated by theCompany prior to December 31, 2008.


(f) Shares held by Non-Executive DirectorsThe table below sets out list of directors holding shares in the Company as on March 31, 2007:

Name of Director Shareholding Percentage

Ajay Singh 10,000,000 4.16%

Siddhanta Sharma 1,000 -

3. AUDIT COMMITTEE

(a) Terms of ReferenceThe Audit Committee was originally constituted on June 1, 2001, and has been re-constituted effectiveApril 24, 2007. The Committee monitors the integrity of the financial statements of the Company,including its annual reports, preliminary results announcements and any other formal announcementsrelating to its financial performance, reviewing significant financial reporting issues in order to achievecredible disclosures and transparency. The envisaged role of the Committee includes, inter-alia,monitoring financial reporting process, reviewing company’s financial and risk management policiesand review of accounting policies and systems.

(b) Number of Audit Committee meetingsDuring the period under review, five (5) meetings were held on June 27, 2006; July 31, 2006; September29, 2006; December 29, 2006 and March 30, 2007.

c) CompositionThe Audit Committee comprises of four directors. The table below sets out the composition andattendance at the Audit Committee meetings as on March 31, 2007:

Name of Member Number of CommitteeMeetings attended

Atul Sharma 5

B. S. Kansagra1 1

Kishore Gupta2 5

Siddhanta Sharma1 5

Notes:

1. Mr. B. S. Kansagra and Mr. Siddhanta Sharma have ceased to be members w.e.f. April 24, 2007.

2. Mr. Mukkaram Jan has replaced Mr. Kishore Gupta as Chairman of the Committee with effect from April 24, 2007.

4. INVESTOR RELATIONS COMMITTEE

a) Terms of ReferenceThe Committee was originally constituted on June 1, 2001 with the name of Share Transfer andInvestors’ Grievance Committee and has been re-constituted effective April 24, 2007. The Committeefocuses on investors’ relation and the envisaged role of include, inter-alia, transfer of shares, redressalof complaints and other investors’ related matters.

b) Number of Investor Relations Committee meetingsDuring the period under review, four (4) meetings were held on June 27, 2006; September 29, 2006;December 29, 2006, and March 30, 2007.


c) CompositionThe Investor Relations Committee comprises of three directors. The table below sets out thecomposition and attendance at the Investor Relations Committee meetings as on March 31, 2007 :

Name of Member Number of CommitteeMeetings attended

Atul Sharma1 4

Kishore Gupta1 4

Siddhanta Sharma 4

Notes:

1. Mr. Atul Sharma and Mr. Kishore Gupta have ceased to be members with effect from April 24, 2007.

2. Mr. B. S. Kansagra and Mr. Vijay Kumar have been appointed as members with effect from April 24, 2007.

3. Mr. B. S. Kansagra has replaced Mr. Atul Sharma as Chairman of the Committee with effect from April 24, 2007.

Mr. A K Maheshwary, Company Secretary, is the Compliance Officer.

In all 328 letters/ complaints were received and replied/ redressed to the satisfaction of shareholder duringthe period June 2006-March 2007.

There were no dematerialisation requests pending for approval as on March 31, 2007.

5. COMPENSATION COMMITTEE

a) Terms of ReferenceThe Compensation Committee was constituted on May 24, 2007, comprising majority of independentdirectors to formulate, administer and implement the Employee Stock Option Scheme in accordancewith the SEBI Guidelines and policies relating to payment of remuneration to directors.

b) Number of Compensation Committee meetingsAs this Committee was constituted on May 24, 2007 no such meeting was held during the periodunder review.

c) CompositionThe Compensation Committee comprises of four directors viz. Mr. Atul Sharma, Mr. Mukkaram Jan,Mr. Kishore Gupta and Mr. Vijay Kumar.

Mr. Mukkaram Jan is the Chairman of the Committee.

6. Risk ManagementThe Company has laid down procedures to inform Board members about risk assessment and minimizationprocedures. These procedures are periodically reviewed to ensure that executive management is controllingrisks through properly defined framework.

The System of risk assessment and follow-up procedure is in place. However, considering the futureexpansion plan and recommendation of the Audit Committee, the same is currently being enhanced withexternal professional assistance.


7. Management Discussion and AnalysisThe Management Discussion and Analysis (MD&A) is provided elsewhere in the Annual Report.

8. Disclosures regarding appointment or re-appointment of directorsResumes are provided in the Notice of the 23rd Annual General Meeting.

9. General Body MeetingsDetails of last three general body meetings are as follows:

General Body Date Time Venue Special ResolutionMeeting Passed

20th AGM July 29, 2004 4.00 p.m. Air Force Auditorium, NASubroto Park,New Delhi-110010

21st AGM November 29, 2005 11.30 a.m. Air Force Auditorium, AmendmentsSubroto Park, to Articles ofNew Delhi-110010 Association

22nd AGM November 30, 2006 3.30 p.m. Air Force Auditorium, Investment by FIIsSubroto Park, as per FEMA/ RBINew Delhi-110010 regulations

During the period June 2006 – March 2007 no resolution was put to vote through postal ballot. Further noresolution is proposed to be passed through postal ballot.

10. Disclosures(a) Disclosures on materially significant related party transaction i.e. transaction of the Company of

material nature, with its promoters, the directors or the management, their subsidiaries or relativesetc. that may have potential conflict with the interests of the company at large:

None of the transactions with any of the related parties, if any, were in conflict with the interest ofthe Company.

(b) Details of non-compliance by the company, penalties, and strictures imposed on the company bystock exchanges or SEBI or any statutory authority, on any matters related to capital markets, duringthe last three years :

No such penalties imposed by any authority.

(c) Subject to comments hereinafter, the Company fully complies with the mandatory requirements underClause 49 of the listing agreement. Adoption of other non-mandatory requirements as per Clause 49is under consideration of the Board.

(i) In the absence of Chief Executive Officer, the Board has specifically authorised the Non-executiveChairman of the Board for required CEO certification under Clause 49 of the listing agreement.

(ii) Pending finalization of Board structure, the Audit Committee comprised of half of the membersas independent directors for the period under review. Effective April 24, 2007 two-third of themembers of audit committee are independent directors.


11. Means of Communication(a) Quarterly Results

Quarterly un-audited results are sent to the exchange for the information of the shareholder. Theresults are normally published in Financial Express and Jansatta. The results of the Company arealso displayed on the official website of SEBI (www.sebi.gov.in) and BSE (www.bseindia.com)

(b) News ReleasesAll the press releases of the Company are sent to BSE for dissemination to shareholders and aresubsequently displayed on the website of the Company at www.spicejet.com.

12. Auditors Certificate on Corporate GovernanceAs required under Clause 49 of the Listing Agreement, the auditors’ certificate is given as an annexureto the Directors’ Report.

13. CEO/ CFO CertificationIn the absence of CEO, the Board has specially authorised the Non-Executive Chairman of the Board forrequired certification. Accordingly, the Non-Executive Chairman and CFO Certification are provided elsewherein the Annual Report.

14. General Shareholder Information

Venue, date and time of the 23rd Annual Sri Satya Sai International Centre, Pragati Vihar,General Meeting Lodhi Road, New Delhi – 110003 on September 11,

2007 at 12 noon.

Book Closure date 10.09.2007 to 11.09.2007 (both days inclusive)

Dividend payment date Not Applicable

Financial Calendar (tentative)

Results for quarter ending Jun 2007 Last week of Jul 2007

Results for quarter ending Sep 2007 Last week of Oct 2007

Results for quarter ending Dec 2007 Last week of Jan 2008

Results for quarter ending Mar 2008 Last week of Apr 2008

Listing on Stock Exchanges BSE LuxSEand codes (shares) (Bonds)

Exchange Code 500285 023415275

Reuters Code SPJT.BO

Bloomberg Code SJET

ISIN in NSDL and CDSL for shares INE285B01017

ISIN in Euroclear and Clearstream for Bonds XS0234152758

Listing fee for 2007-08 Paid for all the above stock exchanges


15. Market Price Data*The market capitalisation of the Company is included in the computation of BSE 200 and BSE MIDCAPIndex. The table below sets out the monthly high and low quotations of the shares traded at Bombay StockExchange Limited during the period under review:

Date High Price (Rs.) Low Price (Rs.)

June 2006 66.40 35.20

July 2006 48.95 38.05

August 2006 45.60 37.50

September 2006 54.70 41.80

October 2006 48.40 40.70

November 2006 58.75 42.05

December 2006 64.00 48.70

January 2007 62.80 53.65

February 2007 60.00 42.00

March 2007 49.90 40.75

* Source: www.bseindia.com

16. Performance in comparison to broad-based indices - BSE SensexChart below sets out SpiceJet price performance relative to BSE Sensex based on daily closing valuesduring June 1, 2006 to March 31, 2007.

The stock price performance shown in the graph above should not be considered indicative of potential future stock priceperformance.


17. Registrar and Transfer Agents - SharesKarvy Computershare Private Limited‘Karvy House’, 46 Avenue 4,Street No. 1, Banjara HillsHyderabad - 500 034www.karvy.com

18. Principal Paying and Conversion Agent and Transfer Agent - USD 80 million Zero CouponConvertible BondsThe Bank of New York48th Floor, One Canada SquareLondon E14 5ALUnited Kingdom

19. Share Transfer SystemThe shares of the Company are traded in compulsory demat segment. However share transfers which arereceived in physical form are processed and the share certificate are returned within 25 to 30 days fromthe date of receipt, provided the documents submitted are valid and complete in all respect.

20. Shareholding pattern as on March 31, 2007

S. No. Category Total Shares % To Equity

1 Banks 295,105 0.12%

2 Bodies Corporate 55,162,673 22.92%

3 Directors 10,000,000 4.16%

4 Foreign Companies 32,296,876 13.42%

5 Foreign Institutional Investors 46,410,521 19.29%

6 Mutual Funds 11,712,318 4.87%

7 Non Resident Indians 24,560,909 10.21%

8 Overseas Corporate Bodies 3,229,500 1.34%

9 Promoters 31,077,500 12.91%

10 Resident Individuals 25,821,692 10.73%

11 Others 84,106 0.03%

TOTAL 240,651,200 100.00%

21. Dematerialisation of shares and liquidityOver 91% of the outstanding shares have been dematerialized upto March 31, 2007. The Shares of theCompany are listed at BSE only where they are actively traded.


22. Outstanding GDR/ Warrants and Convertible Bond

Foreign Currency Convertible Bonds (FCCB)Brief terms of the FCCBs issued in 2005-06 are as under:

Total Issue Size US$ 80 million

Face Value US$ 100,000 each

Conversion Price Rs.57 per equity share

Conversion Period Between December 7, 2005 and November 11, 2010

Conversion during June 06 – NILMarch 2007

Utilisation of FCCB proceeds The proceeds received by the Company has been utilised tomake non-refundable pre-delivery payments to the BoeingCompany to acquire 10 new aircraft.

23. Plant LocationsThe Company does not have plant location. The Company has offices at Ahmedabad, Bangalore, Chennai,Delhi, Goa, Guwahati, Hyderabad, Jammu, Jaipur, Kolkata, Mumbai, Pune and Srinagar airports for itsairline operations:

24. Address for correspondence(a) For shares in physical/ demat mode

Karvy Computershare Private Limited‘Karvy House’, 46 Avenue 4,Street No. 1, Banjara HillsHyderabad - 500 034www.karvy.com

(b) Any query on Annual ReportSenior Manager (Legal and Company Affairs)SpiceJet Limited319, Udyog Vihar, Phase-IV,Gurgaon - 122016 Haryanawww.spicejet.com


CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

We, Siddhanta Sharma, non-Executive Chairman (now appointed as Executive Chairman at the Board Meetingheld on July 30, 2007, which is subject to approval of the Central Government and will be effective from thedate of such approval) of the Company and Partha Sarthi Basu, Chief Financial Officer of the Company, to thebest of our knowledge and belief certify that:

1. We have reviewed financial statements and the cash flow statement for the period ended March 31, 2007and that to the best of our knowledge and belief :

(i) these statements do not contain any materially untrue statement or omit any material fact or containstatements that might be misleading;

(ii) these statements together present a true and fair view of the company’s affairs and are in compliancewith existing accounting standards, applicable laws and regulations.

2. There are, to the best of our knowledge and belief, no transactions entered into by the Company during theyear which are fraudulent, illegal or violative of the company’s code of conduct.

3. We are responsible for establishing and maintaining internal controls for financial reporting and haveevaluated the effectiveness of internal control systems of the company pertaining to financial reporting.

4. We have indicated to the Auditors and the Audit committee :

(i) significant changes in internal control over financial reporting during the year;

(ii) significant changes in accounting policies during the year and the same have been disclosed in thenotes to the financial statements; and

(iii) any fraud, which we have become aware and that involves the Management or other employee whohave significant role in the Company’s internal control systems.

5. It is further declared that all the board members and senior management have affirmed compliance withthe Company’s Code of Conduct for the period June 2006 - March 2007.

Sd/- Sd/-Siddhanta Sharma Partha Sarthi BasuNon-Executive Chairman Chief Financial Officer

Place: GurgaonDate: July 30, 2007


COMPLIANCE CERTIFICATE FROM STATUTORY AUDITORS OF THE COMPANY

TO THE MEMBERS OF SPICEJET LIMITED

(i) We have examined the compliance of conditions of Corporate Governance by SpiceJet Limited, for theperiod ended on March 31, 2007, as stipulated in relevant clauses of the Listing Agreement of the saidCompany with the Stock Exchanges in India.

(ii) The compliance of conditions of Corporate Governance is the responsibility of the management. Ourexamination was limited to procedures and implementation thereof, adopted by the Company for ensuringthe compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression ofopinion on the financial statements of the Company.

(iii) Based on the records and documents maintained by the Company and the information and explanationsgiven to us in our opinion, except as detailed hereunder the Company has complied with the conditions ofCorporate Governance as stipulated in the above mentioned Listing Agreement.

(iv) In the absence of CEO, the Company could not comply with CEO Certification prescribed under Clause 49of the listing agreement. However, the Board has authorised its Non-executive Chairman (now appointedas Executive Chairman at the Board Meeting held on July 30, 2007, which is subject to approval of theCentral Government and will be effective from the date of such approval) to certify certain documentsrequired for compliance.

(v) The Audit Committee comprised of half of the members as independent director for the period underreview. Effective April 24, 2007 two-third of the members of audit committee are independent directors.

(vi) We further state that such compliance is neither an assurance as to the future viability of the Companynor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For Walker Chandiok & Co.Chartered Accountants

Sd/-David JonesPartner

Membership No. 98113Place: New DelhiDate: July 30, 2007


AUDITORS’ REPORT

TO THE MEMBERS OF SPICEJET LIMITED

1. We have audited the attached Balance Sheet of SpiceJet Limited, (the ‘Company’) as at March 31, 2007, andalso the Profit and Loss Account and Cash Flow Statement for the 10 month period ended on that date annexedthereto. These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report)(Amendment) Order, 2004 (the ‘Order’) issued by the Central Government of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956 (the ‘Act’), we give in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Order.

4. As stated in Note 9 in the Schedule XVIII of the financial statement, the Company has not appointed anyManaging director/ whole time Director or Manager which is a non compliance of Section 269 of the Act.

5. Further to our comments in the Annexure referred to above, we report that :

a. As more fully explained in the note 3.1 of Schedule XVIII to the financial statements, an amount of Rs. 360million, given as security deposit towards lease of a property, is carried as recoverable under the headLoans and advances. The Company is presently not in possession of the said property and has filed acriminal compliant against some of the erstwhile promoter directors and ex-employees of the Company forexecuting this transaction. The above deposit appears to be doubtful of recovery, for which no provision hasbeen made in the accounts.

b. As more fully explained in the note 3.3 of Schedule XVIII to the financial statements, the Company has notaccrued interest in respect of outstanding inter corporate deposits of Rs. 100 million which as at March 31,2007 amounts to Rs. 222.15 million.

c. As more fully explained in the note 3.5 and 3.7 of Schedule XVIII to the financial statements, Loans andadvances includes an amount of Rs. 36.11 million which represents net impact of unsupported deposits to,and withdrawals from, the bank accounts which were operated by some of the erstwhile Director (s) and/ orsome ex-employees of the Company. In the absence of supporting documents/ information, this amountappears to be doubtful for recovery for which no provision has been made in the financial statement.

d. As more fully explained in the note 3.6 of Schedule XVIII to the financial statements, balance in Sundrydebtors as at March 31, 2007 includes Rs. 5.90 million recoverable from parties in which the erstwhilepromoters are interested. The Company has not created any provision against this balance though therecovery of this amount appears to be doubtful considering the various pending litigations with erstwhilepromoters.

We further report that had the observations made by us in paragraphs 5 a, b, c and d above been considered, thenet loss for the period would have been Rs.1,331.59 million (as against the reported net loss of Rs.707.43million), accumulated losses would have been Rs. 4,363.60 million (as against the reported figure of Rs.3,739.44 million), loans and advances would have been Rs. 757.68 million (as against the reported figure of Rs.1,153.79 million), sundry debtors would have been Rs. 49.71 million (as against the reported figure of Rs. 55.61million) and current liabilities would have been Rs. 6,767.37 million (as against the reported figure of Rs. 6,545.22million).


6. Further to our comments in the Annexure referred to above, we report that

a. We have obtained all the information and explanations, which to the best of our knowledge and beliefwere necessary for the purposes of our audit, except to the extent stated in paragraph 5(c) aboveregarding unsupported bank transactions;

b. In our opinion proper books of account as required by law have been kept by the Company so far asappears from our examination of those books;

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are inagreement with the books of account;

d. Subject to our comments in paragraph 5 above, in our opinion and to the best of our information andaccording to the explanations given to us, the financial statements, read together with the notesthereon, comply with the accounting standards referred to in sub-section (3C) of Section 211 of theAct, give the information required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India, in the case of:

i) the Balance Sheet, of the state of affairs of the Company as at March 31, 2007;

ii) the Profit and Loss Account, of the loss for the 10 month period ended on that date; and

iii) the Cash Flow Statement, of the cash flows for the 10 month period ended on that date;

7. Without qualifying our opinion, we draw attention to Note 8 in Schedule XVIII to the financial statementswhich indicates that the Company has suffered recurring losses from operations with net loss for the 10month period ended March 31, 2007, without considering the impact of the matters mentioned in paragraph5 above, amounting to Rs.707.43 million, and as of that date, the Company’s accumulated losses amountedto Rs. 3,739.44 million, as against the Company’s share capital and reserves of Rs.5,585.22 million. Also,as discussed in Note 3 in Schedule XVIII to the financial statements, realization of the carrying amount ofcertain receivable amounting to Rs. 402 million and dismissal of interest liability amounting to Rs. 222.15million is dependent on upon the success of the claims filed by the Company against some of the erstwhiledirectors and employees. These conditions raise significant doubt about the Company’s ability to continueas a going concern. Management’s plans in regard to these matters are also described in Note 8. Theaccompanying financial statements do not include any adjustments that might result from the outcome ofthese uncertainties and also do not include any adjustments relating to the recoverability and classificationof asset carrying amounts or the amount and classification of liabilities that might be necessary should theCompany be unable to continue as a going concern.

8. On the basis of written representations received from the directors as on March 31, 2007, and taken onrecord by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2007from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

For Walker, Chandiok & CoChartered Accountants

David JonesPartnerMembership No. 98113

Place: New DelhiDated: May 24, 2007


Annexure to the auditors’ report of even date to the members of SpiceJet Limited, on thefinancial statements for the year ended March 31, 2007

Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financialstatements and in terms of the information and explanations given to us and the books and records examinedby us in the normal course of audit, we report that:

(i) (a) The Company is maintaining proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) The Company’s programme of physical verification of all its fixed assets over a period of 2 years, isin our opinion, reasonable having regard to the size of the Company and the nature of its fixedassets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets have not been disposed off during the period.

(ii) (a) Inventory has been physically verified by the management during the period. In our opinion, thefrequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable andadequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and the discrepancies were noted on physicalverification carried out at the end of the period have been duly adjusted in the inventory records.

(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other partiescovered in the register maintained under section 301 of the Act. Accordingly, the provisions ofclauses 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the Order are not applicable to the Company.

(b) The Company has taken borrowings from one party covered in the register maintained under section301 of the Act. The maximum amount involved during the period was Rs. 455.38 million and theperiod-end balance of loans taken from this party was Rs. 404.52 million.

(c) In our opinion, the rate of interest and other terms and conditions for this loan is not prima facieprejudicial to the interest of the Company.

(d) In respect of loan taken, repayment of the principal amount is as stipulated and payment of interesthas been regular.

(iv) In our opinion, there are adequate internal control systems commensurate with the size of the Companyand the nature of its business, for the purchase of inventory, fixed assets and for the sale of assets andservices. During the course of our audit, no major weakness has been noticed in the internal controls inrespect of these areas.

(v) (a) We are of the opinion that the particulars of contracts or arrangements referred to in section 301 ofthe Act have been entered in the register maintained under that section.

(b) In our opinion the transaction made in pursuance of contracts or arrangement referred to in section301 of the Act, are at prices which are reasonable having regard to the prevailing market price at therelevant time.

(vi) The Company has not accepted any deposits from the public and accordingly, the provisions of clause4(vi) of the Order are not applicable to the Company.


(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of itsbusiness.

(viii) To the best of our knowledge, the Central Government has not prescribed maintenance of cost recordsunder clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of theCompany and accordingly, the provisions of clause 4(viii) of the Order are not applicable to the Company.

(ix) (a) The Company is regular in depositing the undisputed statutory dues including provident fund, investoreducation fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service-tax, customduty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.No undisputed amounts payable in respect of income-tax, wealth-tax, service-tax, sales-tax, customsduty and excise duty were outstanding, at the period-end for a period of more than six months fromthe date they became payable.

(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty,cess on account of any dispute, are as follows:

Name of the statute Nature of dues Amount Period to which Forum where(Rs. in the amount relates dispute is pendingmillion)

Employee’ Employee state 1.67 November 1996 to ESIC RegionalState Insurance insurance dues September 1997 Office DelhiAct, 1948

Indian Penalty upon 82.69 March 1996 to Delhi High CourtCustoms Act, delay in payment August 19961962 of custom duty

(x) The Company’s accumulated losses at the end of the period are more than fifty percent of its net worth.The Company has incurred cash loss during the period. In the preceding financial year also, the Companyhad incurred cash losses.

(xi) The Company has not defaulted in repayment of dues to a financial institution, bank or to debentureholders during the period.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge ofshares, debentures and other securities and accordingly, the provisions of clause 4(xii) of the Order arenot applicable to the Company.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, theprovisions of clause 4(xiii) of the Order are not applicable to the company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and otherinvestments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions.Accordingly, the provisions of clause 4(xv) of the Order are not applicable to the company.

(xvi) The Company has applied the term loans for the purposes for which they were obtained.


(xvii) Based on an overall examination of the balance sheet and cash flow statement of the Company, wereport that no funds raised on short-term basis have been used for long-term investment (excludespermanent working capital).

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in theregister maintained under section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of theOrder are not applicable to the company.

(xix) In respect of the Zero Coupon Foreign Currency Convertible Bonds (“Bonds”) issued by the Company andoutstanding during the period, the securities created fully cover the amount of the Bonds.

(xx) The Company has not raised any money by public issues during the period. Accordingly, the provisionsof clause 4(xx) of the Order are not applicable to the company.

(xxi) The Company has not been able to recover Rs. 22.27 million of sales wherein travel tickets were purchasedby passengers through unauthorized usage of credit card. This amount has been recorded as an expenseduring the period. Except for such unauthorized transactions, no fraud on or by the Company has beennoticed or reported during the period covered by our audit.

For Walker, Chandiok & CoChartered Accountants

David JonesPartnerMembership No. 98113

Place: New DelhiDate: May 24, 2007


This is Balance Sheet referred to in our report of even date

Walker, Chandiok & CoChartered Accountants

David JonesPartnerM. No. 98113

Place : New DelhiDate : May 24, 2007

For and on behalf of the Board of DirectorsSiddhanta Sharma Atul SharmaSiddhanta Sharma Ajay Singh B. S. Kansagra Khaled Mohammad Ali Al Kamda

Chairman Director Director Director

Kishore Gupta Mukkaram Jan Osman QureshiDirector Director Director

Partha Sarathi Basu A. K. MaheshwaryChief Financial Officer Associate Vice President-

Legal & Company Secretary

BALANCE SHEET AS AT MARCH 31, 2007

Schedules As At As At

March 31, 2007 May 31, 2006

(Rs. Millions) (Rs. Millions)

SOURCES OF FUNDS

Shareholder's Funds

Share Capital ............................................................................. I 2,406.51 1,843.39

Reserve and Surplus............................................................ II 3,178.71 1,060.90

5,585.22 2,904.29

LOAN FUNDS

Secured Loans..................................................................... III 3,571.82 3,596.40

Unsecured Loans................................................................. IV 749.70 610.85

9,906.74 7,111.54

APPLICATION OF FUNDS

Fixed Assets

Gross Block......................................................................... V 621.12 588.83

Less: Depreciation............................................................... 137.34 98.40

Net Block............................................................................. 483.78 490.43

Capital Work In Progress (Including Capital Advances) 6,943.51 3,628.92

Investments............................................................................. VI 812.22 0.00

Current Assets, Loan and Advances VII

Inventories........................................................................... 79.40 33.98

Sundry Debtors.................................................................... 55.61 37.21

Cash and Bank Balances...................................................... 3,510.46 634.32

Loans and Advances............................................................ 1,153.79 798.76

4,799.26 1,504.27

Less : Current Liabilities and Provisions VIII

Current Liabilities.................................................................. 6,456.22 1,495.96

Provisions............................................................................ 415.25 141.92

6,871.47 1,637.88

Net Current Assets.................................................................. (2,072.21) (133.61)

Miscellaneous Expenditure

Deferred Revenue Expenditure.................................................. IX — 93.78

Profit and Loss Account......................................................... 3,739.44 3,032.02

9,906.74 7,111.54

Significant Accounting Policies XVII

Notes to the Financial Statements XVIII

The Schedule referred to above form an integral part of the financial statements


PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2007

Schedules For the 10 Month For thePeriod Ended Year Ended

March 31, 2007 May 31, 2006(Rs. Millions) (Rs. Millions)

INCOME

Operating Revenue.................................................................... X 6,404.44 4,196.45

Other Income............................................................................. XI 1,078.35 323.34

7,482.79 4,519.80

EXPENDITURE

Operating Expenses.................................................................. XII 6,441.10 3,783.73

Employees Remuneration and Benefits...................................... XIII 855.00 479.73

Selling Expenses....................................................................... XIV 279.56 231.74

Administrative Expenses............................................................ XV 469.84 361.14

Finance Charges....................................................................... XVI 42.65 41.64

Depreciation and Amortisation................................................... V 58.47 81.58

8,146.61 4,979.56

LOSS BEFORE TAX AND PRIOR PERIOD ITEMS 663.82 459.76

Tax Expense - Fringe Benefits Tax............................................ 9.94 13.12

LOSS AFTER TAX...................................................................... 673.76 472.88

Prior Period Adjustments............................................................ 33.67 (58.68)

NET LOSS FOR THE PERIOD 707.43 414.20

Add : Loss Brought Forward...................................................... 3,032.02 2,617.81

BALANCE CARRIED TO THE BALANCE SHEET 3,739.44 3,032.02

Loss per Share

Basic......................................................................................... 3.72 2.42

Diluted........................................................................................ 3.72 2.42

Significant Accounting Policies XVII

Notes to the Financial Statements XVIII

The Schedule referred to above form an integral part of the financial statements











SCHEDULES TO THE BALANCE SHEETAs At As At


SCHEDULE I - SHARE CAPITAL

Authorised350,000,000 (Previous Year 250,000,000) Equity Shares of Rs. 10Each............................................................................................................ 3,500.00 2,500.00

Issued240,651,200 Equity Shares (Previous Year 184,344,910)............................. 2,406.51 1,843.39of Rs. 10 Each

Subscribed240,651,200 Equity Shares (Previous Year 184,344,910)............................. 2,406.51 1,843.39of Rs. 10 Each

Paid Up240,651,200 Equity Shares (Previous Year 184,344,910) ............................ 2,406.51 1,843.39of Rs. 10 Each Fully Paid Up(Refer Note no 3.1 in Schedule XVIII)

2,406.51 1,843.39SCHEDULE II - RESERVES AND SURPLUSShare Premium

Balance as per last Balance Sheet.............................................................. 1,060.90 705.37Add : Premium received on issue of shares during the year 2,403.97 603.70Less : Foreign currency convertible bonds (FCCB) issue expenses @...... (126.48)Less : Premium payable on Redemption of FCCB’s..................................... (243.46) (121.69)

(Refer note no 11(i)(b) in Schedule XVIII)Less : Expenses relating to further equity raised during the year @@........ (42.70)

3,178.71 1,060.90@ During the 10 month period ended March 31, 2007 an amount of Rs. NIL(Previous year Rs. 126.48 million) relating to issue expenses for FCCBhas been debited to Share Premium Account .@@ During the current period an amount of Rs. 42.70 million (PreviousYear Rs. NIL) relating to issue expenses for equity share capital raisedduring the year has been debited to Share Premium Account.

SCHEDULE III - SECURED LOANS800 Zero Coupon Secured Foreign Currency Convertible Bonds(FCCB’s) face value US $ 1,00,000 each (Refer note no 11(i) inSchedule XVIII) 3,487.20 3,596.40Loan from SICOM Limited 84.62(Refer note no 11 (ii) in Schedule XVIII).......................................................

3,571.82 3,596.40Note: Includes amount payable with in one year Rs 84.62 Million

SCHEDULE IV - UNSECURED LOANSLoans from Banks 246.41 108.26Inter Corporate Deposits 100.00 100.00(Refer. Note nos 3.2 and 3.3 in Schedule XVIII)Advances From Bodies Corporate 14.09 14.09(Refer. Note no 3.4 of in Schedule XVIII)OTHERS :Other Borrowings (External Commercial Borrowings) 389.20 388.50

Total........................................................................................................... 749.70 610.85

Note: Includes amount payable with in one year Rs. 13.08 Million(Previous year Rs. 61.12 Million)


P A R T I C U L A R S As On Addit ions Deletions As On As On Addit ions Deletions As On As On As On01.06.06 For the Year For the Year 31.03.07 01.06.06 For the Year for the Year 31.03.07 01.06.06 31.03.07

Tangible Assets

1 Off ice Equipment 59.38 24.65 — 84.03 3.09 3.65 — 6.74 56.29 77.29

2 Computers 49.51 7.57 — 57.08 9.75 7.16 — 16.91 39.76 40.16

3 Furniture & Fixture 8.32 0.77 — 9.09 3.26 1.19 — 4.45 5.06 4.64

4 Motor Vehicles 46.24 11.34 — 57.58 7.70 5.79 — 13.49 38.54 44.09

5 Plant & Machinery 33.20 — 0.79 32.41 15.67 1.37 0.41 16.63 17.53 15.78

6 Rotable and Tools 224.89 59.63 — 284.52 8.57 12.57 — 21.14 216.32 263.38

7 Capital Expenditure on 13.37 3.89 — 17.26 8.87 6.11 — 14.98 4.49 2.28Leased Property

8 Capital Expenditure on 88.82 — 88.82 0.00 19.12 — 19.12 — 69.70 —Leased Aircraft#

Sub Total 523.72 107.86 89.61 541.97 76.03 37.83 19.52 94.34 447.69 447.63

Intangible Assets

1 Application Software 65.11 14.04 — 79.15 22.37 20.64 — 43.00 42.74 36.14

Sub Total 65.11 14.04 0.00 79.15 22.37 20.64 0.00 43.00 42.74 36.14

Total 588.83 121.90 89.61 621.12 98.40 58.47 19.52 137.34 490.43 483.78

Previous Year Total 171.91 428.04 11.11 588.83 42.68 81.58 25.87 98.40 129.23 490.43

GROSS BLOCK DEPRECIATION NET BLOCK

SCHEDULE - V : FIXED ASSETS (Amount in Rs. Mil l ion)

As At As AtMarch 31, 2007 May 31, 2006

(Rs. Millions) (Rs. Millions)SCHEDULE VI - INVESTMENTSLONG TERM, UNQUOTED (NON TRADE)1,250,000 Equity Shares Of Rs 10 Each Fully Paid Up of............................ 12.50 12.50Moodi Hoover International LimitedLess :Provision for Diminution in the Value of Investment....................................... 12.50 12.50

0.00 0.00CURRENT, UNQUOTED (NON TRADE)LIC Floating Rate ST Growth- G................................................................. 50.004,313,451 Units at NAV of 11.5916 (Previous year NIL)Reliance Floating Rate Fund - G.................................................................. 50.004,408,648 Units at NAV of 11.3413 (Previous year NIL)Birla Floating Rate STI- G............................................................................ 160.0014,761,645 Units at NAV of 10.8389 (Previous year NIL)Tata Fixed Horizon Fund Series-8 Sch F..................................................... 100.0010,000,000 Units at NAV of 10 (Previous year NIL)DBS Chola - Fixed Maturity Plan Series....................................................... 100.0010,000,000 Units at NAV of 10 (Previous year NIL)Birla Fixed Horizon Plan Qtly Series-6......................................................... 100.0010,000,000 Units at NAV of 10 (Previous year NIL)Tata Fxd Horiz Fund(qtly) Series 9 sch-E.................................................... 100.0010,000,000 Units at NAV of 10 (Previous year NIL)Tata Dynamic Bond B-G.............................................................................. 51.524,284,854 Units at NAV of 12.0225 (Previous year NIL)Reliance Mthly Interval Fnd-Srs-I(10.65)..................................................... 100.7010,701,000 Units at NAV of 10 (Previous year NIL)

812.22 0.00

Aggregate Book Value Of Unquoted Investments......................................... 812.22 12.50Aggregate Net Asset value of Unquoted Investments.................................. 821.92Aggregate values of investment purchased and sold during the year:Purchases................................................................................................... 1,002.22Sales........................................................................................................... 1,814.43

S.No.

# Refer to note 5 in Schedule XVIII




SCHEDULE VII - CURRENT ASSETS, LOANS AND ADVANCES

INVENTORIES(AS TAKEN, VALUED AND CERTIFIED BY THE MANAGEMENT)Engineering Stores (Including Consumables).............................................. 83.42 39.57Inventory In Transit..................................................................................... 0.66 1.19Fuel............................................................................................................. 1.90 1.69Other Stores............................................................................................... 2.71 0.81Crockery and Cutlery.................................................................................. 3.14 3.15

91.83 46.41Less : Provision for Obsolescence.............................................................. 12.43 12.43

Total (A)..................................................................................................... 79.40 33.98

SUNDERY DEBTORS (UNSECURED, CONSIDERED GOOD)Exceeding Six Months................................................................................. 4.05 4.05Less than Six Months................................................................................. 51.56 33.16

Total (B)..................................................................................................... 55.61 37.21

CASH & BANK BALANCESCash In Hand.............................................................................................. 7.48 6.39With Scheduled BanksIn Current Account...................................................................................... 138.17 163.19In Fixed Deposits (Including Interest Accrued) #......................................... 3,104.42 479.19In Margin Money as security........................................................................ 276.61Less: Provision for disputed bank balance................................................... (16.67) (16.67)

Total (C).................................................................................................... 3,510.01 632.10

Balance with other Bank in current accountHSBC (USA) maximum balance at any time during the yearRs 3,501.99 Million (Previous Year Rs Nil)

0.45 2.22Total (D).................................................................................................... 0.45 2.22

Total Cash and Bank Balance (C+D) 3,510.46 634.32

LOANS AND ADVANCESAdvances Recoverable In Cash Or In Kindor for value to be received.......................................................................... 49.52 44.56Deposit for Long Term Lease of Property..................................................... 360.00 360.00Deposit with Mumbai High Courts................................................................ 50.00 50.00Security Deposits........................................................................................ 367.03 176.13Taxes/ Paid in Advance Recoverable @...................................................... 65.68 62.69Prepaid Expenses....................................................................................... 115.39 56.27Advance To Supplier.................................................................................... 184.30 49.11

1,191.92 798.76Less:Provision For Doubtful Advances....................................................... 38.12 0.00

Total (E)..................................................................................................... 1,153.79 798.76

Classification Of Loans And Advances :1. Considered Good.................................................................................... 1,153.79 798.762. Considered Doubtful And Provided For.................................................... 38.13 0.00

1,191.92 798.76

Total (A)+(B)+(C)+(D)+(E)......................................................................... 4,799.26 1,504.27

# Includes Rs 276.61 Million (Previous year Rs. 353.87 Million) margin moneywith bankers for issuing Letter of Credit/Stand by Letter of Credit/Bank Guarantees.@ Includes Cenvat Receivable Rs. 38.12 Million (Previous Year Rs. 47.81)



March 31, 2007 May 31, 2006SCHEDULE VIII - CURRENT LIABILITIES AND PROVISIONS (Rs. Millions) (Rs. Millions)

CURRENT LIABILITIESSundry Creditors.......................................................................................... 475.98 529.11Expenses Payable....................................................................................... 254.60 172.75Unearned Revenue...................................................................................... 755.27 512.29Deposits....................................................................................................... 90.76 104.35Advance Received Against Agreement to Sell Aircraft.................................. 4,745.41 0.00Interest Accrued But Not Due...................................................................... 27.92 13.28Other Liabilities............................................................................................. 106.28 164.18Note: No Amounts are due to Investor Education and Protection Fund.

Total (A)...................................................................................................... 6,456.22 1,495.96

PROVISIONSGratuity........................................................................................................ 7.98 3.18Leave Encashment...................................................................................... 26.06 1.99Fringe Benefits Tax...................................................................................... 16.06 15.05Premium on Redemption of FCCBs.............................................................. 365.15 121.70(See Note no. 11(i)(b) in Schedule XVII)

Total (B)...................................................................................................... 415.25 141.92

Total (A)+(B)............................................................................................... 6,871.47 1,637.88

SCHEDULE IX - DEFERRED REVENUE EXPENDITURELicence Acqiusition CostOpening Balance as per last balance sheet.................................................. 93.78 11.62

Additions during the year 102.8993.78 114.51

Less: Amount amortised during the year...................................................... 20.73Less: Expensed off due to change in accounting policy............................... 93.78(Refer note 7 of Schedule XVIII).................................................................. — 93.78


SCHEDULES TO PROFIT & LOSS ACCOUNTFor the 10 Month For the

Period Ended Year EndedMarch 31, 2007 May 31, 2006

(Rs. Millions) (Rs. Millions)SCHEDULE X - OPERATING REVENUEPassenger Revenue................................................................................... 6,056.41 4,000.23Other Passenger Related Revenue............................................................. 348.03 196.23

6,404.44 4,196.45SCHEDULE XI - OTHER INCOMEProfit On Sale of Aircraft............................................................................. 442.04 177.06Income Of Passenger Service Fee Collection............................................. 9.36 7.05Equipment Hire Charges.............................................................................. 11.36 0.00Income from sale of Average Seat Kilometers............................................. 21.90 8.14Dividend Income.......................................................................................... 3.79 0.00Interest Income #........................................................................................ 68.92 19.37Incentives received..................................................................................... 106.88Old credit balances written back................................................................. 186.25Exchange Fluctuation Gain.......................................................................... 51.40 (11.67)Other Income.............................................................................................. 176.45 123.39

1,078.35 323.34# Taxes deducted at source- Rs 1.15 Million (Previous Year Rs 0.39 Million)

SCHEDULE XII - OPERATING EXPENSESAircraft Lease Rental #................................................................................ 1,367.06 771.67Aircraft Fuel And Oil.................................................................................... 3,494.39 1,989.83Aircraft Maintenance Cost........................................................................... 671.57 470.56Aviation Insurance....................................................................................... 146.88 111.67Landing, Navigation and Other Airport Charges........................................... 601.59 339.33Inflight and Other Passenger Amenities....................................................... 45.89 32.59Operating Software Charges....................................................................... 48.20 32.80Other Operating Expenses.......................................................................... 65.53 35.28

6,441.10 3783.73# Net of recoveries on Sub-leasing of Rs 10.71 Million (Previous yearRs 5.65 Million)

SCHEDULE XIII - EMPLOYEE REMUNERATION & BENEFITSSalaries, Wages, Bonus and Allowances..................................................... 656.13 440.04Contribution To Provident and Other Funds................................................. 18.71 9.39Provision for Gratuity................................................................................... 5.42 2.75Provision for Leave Encashment................................................................. 24.88 1.76Recruitment................................................................................................ 7.84 2.13Training Cost............................................................................................... 124.53 11.49Staff Welfare Expenses............................................................................... 17.49 12.17

855.00 479.73SCHEDULE XIV - SELLING EXPENSESAgents Commission and Discounts............................................................. 64.46 32.52Credit Card Expenses................................................................................. 62.45 56.40Credit Card Chargebacks........................................................................... 22.87 33.46Business Promotion and Advertisement...................................................... 129.78 109.36

279.56 231.74SCHEDULE XV - ADMINISTRATIVE EXPENSESRent, Rates and Taxes................................................................................ 37.55 26.32Repairs and Maintenance............................................................................— Buildings................................................................................................. 24.30 19.96— Plant and Machinery................................................................................ 5.55 2.11— Vehicle Running and Maintenance........................................................... 8.97 6.14— Others.................................................................................................... 0.60 0.75Freight and Cartage..................................................................................... 4.25 4.90Communications.......................................................................................... 26.30 30.02Printing and Stationery................................................................................ 28.32 22.08Travelling and Conveyance.......................................................................... 160.15 121.56Legal, Professional and Consultancy Charges............................................ 72.18 90.57Auditor Remuneration :................................................................................Audit Fees................................................................................................... 2.23 1.12


SCHEDULES TO PROFIT & LOSS ACCOUNTFor the 10 Month For the

Period Ended Year EndedMarch 31, 2007 May 31, 2006


Certification and Other Services 1.40 0.58Out Of Pocket Expenses 0.20 0.01Gas,Electricity and Water 6.25 5.22Assets Written-Off 0.36 0.15Insurance 9.74 1.77Watch and Ward Expenses 1.07 0.85Provision for Doubtful Cenvat Recoverable 40.51 —Deferred revenue expenses written off 20.73Miscellaneous Expenses 39.91 6.26

469.84 361.14SCHEDULE XVI - FINANCIAL CHARGESInterest 27.31 31.34Bank Charges 15.34 10.30

42.65 41.64


SCHEDULE XVII - SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF ACCOUNTING

The financial statements are prepared under historical cost convention, on accrual basis, in accordancewith the generally accepted accounting principles in India, the accounting standards and relevant guidancenote issued by the Institute of Chartered Accountants of India (ICAI) and the relevant provisions of theCompanies Act, 1956, except as stated Schedule XVIII.

2. USE OF ESTIMATES

The preparation of the financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and the disclosure of contingent assets and liabilities on the date of the financial statements andthe results of operations during the reporting periods. Although these estimates are based upon management’sbest knowledge of current events and actions, actual results could differ from those estimates and revisions,if any, are recognised in the current and future periods.

3. FIXED ASSETS

Tangible assets

Fixed Assets are carried at cost less depreciation and impairment loss, if any. The cost of fixed assets areinclusive of duties, taxes, interest on borrowings attributable to acquisition of fixed asset and other incidentalcosts incurred upto the time the assets are ready for their intended use. Spares which can be used only inconnection with aircraft and whose use is expected to be irregular are included in fixed assets at cost.

Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost offixed assets not ready for intended use before such date are disclosed under capital work-in-progress.

Intangible assets

Intangible assets comprises of Software which is not an integral part of the related hardware, is classifiedas an intangible asset and is being amortised over a period of 3 years, being the estimated useful life. Thecost of software comprises of acquisition charges and/or implementation fee.

4. BORROWING COST

Borrowing costs, attributable to the acquisition or construction of a qualifying asset is capitalized as partof the cost of the asset. Borrowing costs relating to assets under acquisition are included under capitalwork in progress pending capitalization with the related assets. Other borrowings cost are recognized asan expense in the period in which they are incurred.

5. DEPRECIATION AND AMORTISATION

Depreciation on fixed assets, other than on Software classified as Intangible, is provided pro-rata on the straightline method, at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956.

Intangible assets comprising of software is amortised over a period of 3 years based on estimated usefullife as determined by the management.


6. IMPAIRMENT OF ASSETS

Company reviews the carrying amounts of assets at each balance sheet date to ascertain if there is anyindication of impairment. An impairment loss is recognised wherever the carrying amount of an assetexceeds its recoverable amount. After impairment, depreciation is provided on the revised carrying amountof the asset over its remaining useful life. The impairment loss recognized in the prior accounting period isreversed if there is change in the estimate of the recoverable amount. However, the carrying value afterreversal is not increased beyond the carrying value that would have prevailed by charging usual depreciationif there was no impairment.

7. INVESTMENTS

Long-term investments are stated at cost. Provision for diminution in the value of long-term investments ismade only if such a decline is other than temporary in the opinion of the management. Current investmentsare carried at lower of cost or market value. Cost for computation of profit or loss on sale of investment iscomputed on the basis of weighted average method.

8. INVENTORIES

Inventories include :

a) Expendable Aircraft Spares

b) Fuel in the Aircraft

c) Miscellaneous stores

Inventories have been valued at cost or net realizable value (NRV) whichever is lower after providing forobsolescence and other losses, where considered necessary. Cost includes customs duty, taxes, freightand other charges, as applicable and is determined using FIFO method.

9. REVENUE RECOGNITION

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Companyand the revenue can be reliably measured. Revenue recognition policies in respect of some of the specifictransactions are as under:

Passenger revenue

Passenger income is recognized when transportation is provided i.e. when the service is rendered. Amountsreceived pursuant to travel bookings/ reservations (net of cancellations) are initially credited to the “UnearnedRevenue Account” under Current Liabilities and income is recognized as indicated above by debiting theUnearned Revenue Account.

Other passenger revenue

Miscellaneous fees charged for reservation / changes in itinerary / cancellation of flight tickets, etc. arerecognized as revenues on accrual basis.

Sale and lease back transaction

Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in casethe transaction is established at fair value, else the excess over the fair value is deferred and amortized


over the period for which the asset is expected to be used. Free of cost spare parts received in respect ofpurchase of air crafts are recorded at their fair value. This fair value is considered as reduction frompurchase cost of air craft and is recorded as other income upon sale of air craft.

Hiring of equipments

Income in respect of leasing/ renting out of equipments and spare parts is due on time proportion basis atrates agreed with the lessee. Due to significant uncertainties involved in realization, the income is recordedon settlement with the lessee or actual realization, whichever is earlier.

Interest

Interest income is recognized using time proportion method, based on the rate implicit in the transaction.

Dividend

Dividend income is recognized when Company’s right to receive dividend is established.

10. LEASES

Operating lease payments are recognized as an expense in the Profit and Loss account on a straight linebasis over the lease term.

11. FOREIGN EXCHANGE TRANSACTIONS

Transactions in foreign currency and non monetary assets are accounted for at the exchange rate prevailingon the date of the transaction. All monetary items denominated in foreign currency are converted at theyear-end rate.

The exchange differences arising on such conversion and on the settlement of the transactions, except forthose relating to acquisition of fixed assets which are adjusted to the carrying amount of the related fixedassets are dealt with in the profit and loss account.

12. RETIREMENT BENEFITS

The Company makes contribution to statutory provident fund, a defined contribution plan, in accordancewith Employees Provident Fund and Miscellaneous Provisions Act, 1952. The contribution paid or payableis recognized as an expense in the period in which services are rendered by the employee.

The Company also has two defined employee benefit plans, namely gratuity and leave salary. Provisionsfor gratuity liability and for leave salary in respect of unavailed leave of employees payable on retirementor otherwise outstanding as at the date of the balance sheet is made based on an actuarial valuation madeby an independent actuary.

13. AIRCRAFT MAINTENANCE COSTS AND ENGINE REPAIRS

Aircraft, Auxiliary Power Unit (APU) and Engine maintenance and repair costs are expensed as incurredexcept where such overhaul costs in respect of engines/APU are covered by third party maintenanceagreements, which are accounted in accordance therewith.


14. PROVISIONS AND CONTINGENCIES

Provision is recognized when the company has a present obligation as a result of past event and it isprobable that an outflow of resources will be required to settle the obligation, in respect of which reliableestimate can be made. Provisions are not discounted to present value and are determined based on bestestimate required to settle the obligation on the Balance Sheet date. These are reviewed at each BalanceSheet date and adjusted to reflect the current best estimates. Contingent Assets and Liabilities are notrecognized in the accounts.

15. TAXATION

Provision for Tax comprises current, deferred and fringe benefit tax. Current tax is provided for on thetaxable profits of the year at applicable tax rates. Fringe Benefit Tax is provided for the amount expected tobe paid to the Income tax authorities. Deferred income taxes reflect the impact of current year timingdifferences between taxable income and accounting income for the year and reversal of timing differencesof earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantivelyenacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent that there isreasonable certainty that sufficient future taxable income will be available against which such deferred taxassets can be realised. Deferred tax assets are recognised on carry forward of unabsorbed depreciationand tax losses only if there is virtual certainty that such deferred tax assets can be realised against futuretaxable profits.

16. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by the weighted average number of equity shares outstanding during the year. Partly paidequity shares are treated as a fraction of an equity share to the extent that they were entitled to participatein dividends relative to a fully paid equity share during the reporting period.

For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equityshareholders and the weighted average number of shares outstanding during the year are adjusted for theeffects of all dilutive potential equity shares.


SCHEDULE XVIII - NOTES TO ACCOUNTS

1. Contingent Liabilities not provided for in the accounts exist in respect of :

S. No. Particulars Rupees in Million

March May31, 2007 31, 2006

i) Demand raised under the provisions of Employee State Insurance 1.67 1.67Act, 1948 for the period November 1996 to September 1997 inclusiveof interest and penalty. (The Company has obtained stay againstrecovery of said demand from the Honorable High Court of Delhi).

ii) Liability arising out of legal cases filed against the Company in 1.52 1.10various Courts / Consumer Redressal Forums, ConsumerCourts, disputed by the Company.

iii) Liability towards Penalty levied by customs department on late 82.69 82.69payments which is disputed and is pending in the Honorable HighCourt of Delhi

iv) Liability towards additional claim received from a vendor who was 17.50 17.50already covered in the settlement scheme approved by theHonorable High Court of Delhi.

v) The Company has significant legal proceeding initiated by and/ or 624.15 612.52against the Company the outcome of which may result into a liabilityor write of advances. These cases have been explained in note 3 below.

2. Estimated amount of Contracts remaining to be executed on Capital Account and not provided for (net ofadvances) Rs.73,994.37 million (Previous year Rs 56,904.76 million).

3. Legal proceeding by and/ or against the Company

3.1. Share Capital includes 11,624,472 million Equity Shares of Rs. 10 each (issued at a premium of Rs. 30each) originally allotted to the three investment companies, of S. K. Modi Group (“SKM Group”). Theseshares were partly paid and were treated as fully paid by adjusting the calls in arrears of Rs. 333.18 millionagainst assignment of security deposit of Rs. 360.00 million by Agache Associates Limited (belonging toSKM GROUP) in favour of the said investment companies. The Security deposits of Rs. 360.00 millionwas shown payable to Agache Associates Limited., under a purported lease agreement dated September11, 1995, which was to be effective from April 1, 1996 for a property situated at Calcutta, West Bengal forproposed training, catering activities and storage of Aircraft spare parts. The possession of the property inquestion is however not with the company. In this regard the Honorable High Court of Delhi, in its interimjudgment dated January 28, 2003 observed;

“It is clear that the convoluted transaction entered into by the Company with Agache Associates primafacie appears to be a stratagem devised to account for the allotment and call money payable for11,549,272 shares valued at Rs. 333,180,880 …”

“Accordingly as an interim measure, it is directed that the property described in detail in the leasedeed dated 11th September 1995 annexed to this application at annexure E and bearing No 15, RatanBabu Road, Cossipore, Calcutta shall remain attached and shall not be disposed off in any manner or



its possession parted with, without the leave of this Court. However, if the amount of Rs. 36 croregiven as security deposit by the company minus the rent upto date at Rs. 10,000/- per month isdeposited in this Court, the attachment is liable to be lifted forthwith …”

The Company had filed a criminal complaint in the court of Chief Metropolitan Magistrate, New Delhiagainst some of the erstwhile promoter directors and ex-employees of the Company for executing theabove transaction. The Chief Metropolitan Magistrate, New Delhi has issued summons to the erstwhilepromoter directors and ex-employees of the Company after completion of pre summoning evidence.

3.2. One of the Inter Corporate Deposit (“ICD”) lenders, M/s Hindustan Development Corporation Limited (“HDCL”)(now renamed as Mallanpur Steels Limited) who had lent Rs. 50.00 million to the Company, had apparentlysold the Securities pledged with it. The transfer of the Securities sold could not be registered in favour ofthe purchaser since the sale was on the basis of invalid / illegal share transfer documents. The purchaserchallenged this refusal before the Company Law Board (“CLB”) which upheld the Company’s stand. Thepurchaser had filed an appeal against CLB order, which is still pending.

3.3. In respect of ICDs aggregating Rs. 100 million, the Company has not accrued interest payable amountingto Rs. 222.15 million upto March 31,2007 (previous year 210.52 million), computed based on interest ratesas per original contract terms for reasons explained below:

� ICD of Rs. 50 million in the name of Agache Associates Limited (affiliated to SKM GROUP) being aparty to the fraudulent transactions (Refer Note 3.1 above).

� In a suit filed by one of the ICD lenders (petitioners), the Company had deposited a sum of Rs 50 millionwith the Bombay High Court and the Hon’ble Bombay High Court later allowed the petitioner to withdrawthe said amount, upon furnishing an undertaking that the petitioner will restitute the said sum or such partthereof, with 9% interest, to the Company, if and as directed by the Court at the time of the final decisionof the suit filed by the petitioner. Accordingly, pending finality of the matter, both the ICD and deposit withHigh Court have been disclosed under the unsecured loans and loans and advances respectively.

3.4. The company had in the earlier years obtained an Interest free advance of Rs.14.09 million (Previous yearRs.14.09 million) from a body corporate belonging to SKM GROUP. However, no claim has yet beenreceived against the same.

3.5. The Company has in its possession the bank-statement of ICICI Bank, New Delhi, which shows a depositof Rs. 34.29 million (Previous year Rs. 34.29 million) on account of refunds from the Income Tax Departmenton November 6, 2000 and July 2, 2001 and subsequent withdrawals (details of amounts appropriated notavailable with the Company) on various dates aggregating to Rs. 34.29 million against cheques/draftsissued to several parties, including group companies of SKM GROUP, by erstwhile Director(s) and/orsome ex-employees of the Company, which amounts to fraudulent preference under section 531 of theCompanies Act, 1956, which was brought to the notice of the Hon’ble Court vide CA 606 of 2003 in CA 797of 2000. The difference of Rs. 34.29 million between balance as per books (since no accounting entry hasbeen recorded for unauthorized withdrawals) and that confirmed by the bankers, is being carried asrecoverable under Loans and Advances and is pending appropriate adjustment on outcome of the ongoingcases and has not been provided for in the accounts.

3.6. In view of various matters pending in courts, dues of Rs. 5.90 million (previous year Rs. 5.90 million) recoverablefrom some of the entities, in which the SKM GROUP is interested, have been retained in the books.

3.7. The Company has in its possession the bank statement of Standard Chartered Grindlays Bank, Mumbai,which shows deposits of Rs. 14.20 million and withdrawals of Rs. 16.01 million through various transactionsmade during the period March 1999 to March 2002. However, in the absence of complete details of thesetransactions appropriate accounting entries could not be recorded in the books in respect of these


transactions. The difference of Rs 1.81 million between the balance as per books and that confirmed bythe bank, is carried as recoverable under “Loans and Advances” and is pending appropriate adjustment onthe outcome of the ongoing litigations with SKM GROUP and entities in which he is interested.

3.8. There are various litigation matters filed by and against SKM GROUP. The outcome of the said cases mayimpact the business operations keeping in view the nature of allegations.

4. The Company does not have possession of share certificates in support of its investments of Rs. 12.50million in 1,250,000 Equity Shares of Rs. 10 each in Modi Hoover International Limited. Accordingly, theCompany has made provision against the same.

5. Till the year ended May 31, 2006, the Company had capitalised lease rentals and other expenses relating toaircraft prior to their start of operations under the head lease hold improvements. Considering that such expensesdo not result in any actual improvement to the aircraft, the management has decided to expense off such underrespective accounts head during the current period. Due to this change in accounting policy, reported loss forthe current period is higher by Rs. 80.78 million whereas fixed assets are lower by the same amount.

6. Till the year ended May 31, 2006, the Company recorded Free of cost (FOC) spares parts received alongwiththe aircraft, at their fair value under “Fixed assets”. Corresponding gain was credited to “Unearned incentive”,which was classified under Current Liabilities. This income was deferred and recorded in the books overthe life of FOC spare parts by transferring an amount equivalent to depreciation on FOC spares parts from“Unearned incentive” account to “Other income” in each reporting period. During the period ended March31, 2007 the Company has changed its accounting policy whereby gain on receipt of FOC Rotables isimmediately recorded as Income in the books. Due to this change in accounting policy, reported loss forthe current period and current liabilities as at March 31, 2007, are lower by Rs. 87.50 million.

7. Till the year ended May 31, 2006, the Company had deferred expenses incurred towards training of pilotsand engineers and salaries paid to them during the training period, to the extent it is required to obtainnecessary licenses for them. Such deferred expenses were amortised over the period of five years.Considering that such expenses are not resulting in creation of any assets, the management has decidedto expense off such under respective accounts head during the current period. Due to this change inaccounting policy, reported loss for the current period is higher by Rs. 99.52 million whereas deferredrevenue expenditure are lower by the same amount.

8. The Company has incurred losses of Rs. 707.43 million during the period ended March 31, 2007. Accumulatedlosses of the Company as at March 31, 2007 are Rs. 3,739.45 million, excluding the impact of non-provisionfor liabilities/ doubtful assets as detailed in the note 3 above. The share capital and reserve stood at Rs.5,585.22 million as on that date. The Board of Directors of the company are of the opinion that most of theaccumulated losses pertain to either the pre-operating period or due to initial start up and entry costs. TheBoard of Directors expects improvement in the business results in forthcoming years due to better yield andlowering of cost. In view of this the financial statements have been prepared on going concern basis.

9. The Company is yet to appoint a Managing Director/Whole time Director or Manager as required by Section269 of the Companies Act, 1956.

10. In the absence of sufficient information from the parties regarding their status as to Small Scale Industries(SSI) units the amount due / overdue to the SSI units could not be ascertained and, therefore, the samehas not been disclosed as required by Part II of Schedule VI of the Companies Act 1956.

11. Secured loans

(i) Zero Coupon Secured Foreign Currency Convertible Bonds (FCCBs):

(a) During the year ended May 31, 2006, the company issued FCCBs of the face value of USD 1,00,000aggregating to USD 80 million. As per the original terms of the issue, the holders have an option to


convert the FCCBs into equity shares at an initial conversion rate of Rs. 90 per equity share at afixed exchange rate of Rs. 46.12 to USD 1 from December 7, 2005 to November 11, 2010. Theconversion price of Rs. 90 per equity share has been revised to Rs. 57 per equity share during theperiod ended March 31, 2007 with all other conditions remaining unchanged. The conversion pricewill be subject to certain adjustments. Further under certain conditions the bondholder has theoption for early redemption in whole but not in part. Unless previously converted, redeemed orpurchased and cancelled, the company will redeem these bonds at 140.499 percent of the principleamount on December 13, 2010.

(b) Premium on redemption of Zero Coupon Secured Foreign Currency Convertible Bonds (FCCBs)

Opening Balance : Rs. 121.69 million

Add : Provision for the period : Rs. 243.46 million

Closing Balance : Rs. 365.15 million

Premium on redemption of FCCBs has been provided from date of issue of bonds till March31, 2007.

(c) The FCCB’s are secured by assignment by way of first priority preferred security interest, mortgages,pledges, charges and hypothecation to the Security trustee and a lien on all its right and title andinterest into the collateral. The Bonds will rank senior to all Subordinated indebtedness of the Companyand senior to the extent of the Security to all present and future unsecured indebtedness of theCompany.

(d) In view of the loss for the period ended March 31, 2007 and the accumulated losses, the companycould not effect any transfer to the ‘Bond Redemption Reserve Account’ as required undersection 117C of the Companies Act 1956. Such transfers are proposed to be made when profitsare available.

(ii) Loan from SICOM Limited

The Company has taken a secured loan from SICOM Limited of which balance outstanding as atMarch 31, 2007 was Rs. 84.62 million. This loan is by

� A first exclusive charge by way of hypothecation in favour of SICOM Bank of all movableassets except movable assets already pledged/ charged/ hypothecated.

� A first charge by way of hypothecation of credit card receivables of the Company by ranking paripassu with other borrowings.

� A pledge on shares held by promoters/ NRI share-holders/ directors valuing at least Rs.150million.

� Floating charge on all other assets of the Company.

12. As on March 31, 2007, the Company decided to convert all accumulated unavailed leaves of employeesinto a fixed liability restricting number of leaves to 30 days and using full cost of employees. This amountis payable within one year. Accordingly no actuarial valuation has been carried out during the year. Previousleave policy will remain applicable for future un-availed leaves and the same shall be valued on the basisof actuarial valuation.

13. Vide an order dated July 15, 2005 the Hon’ble High Court of Delhi sanctioned a Scheme of Compromise(the “Scheme”) with the Participating Creditors of Spicejet Limited, requiring the Company to disburse theamount so determined in two installments; one upon sanction of the Scheme and the second within a yearof the sanction. Pursuant to this order, the Company deposited the first installment in 2005 and tendereda cheque of Rs. 890,00,000 towards the second installment with the Registry on July 15, 2006. However, the

Registry did not accept the cheque for the second installment on the grounds that it was not supported with theHon’ble High Court of Delhi’s order to encash the same. The company since moved two applications to theHon’ble High Court of Delhi requesting that the cheque be allowed to be re-deposited with and encashed by theRegistry and obtained an order to this effect on April 20, 2007. However, as per directions issued by the Hon’bleHigh Court requiring all such payments to be made through either Demand Draft or Pay Order the Company wasobligated to cancel the cheque and replace the same with a Demand Draft for the same amount which wasaccepted by the Registry on May 25, 2007. As the cheque was valid as at March 31, 2007, and further that theliability in this regard was extinguished subsequent to year-end only due to administrative reasons the secondinstallment of the Scheme has been considered as disbursed for the purpose of these financial statements.

14. During the period ended March 31, 2007 the Company decided to write back some of the old outstandingcredit balances aggregating to Rs. 186.25 million. The Company has not received any claim in respect ofcredit balances included in these and these balances are time barred as per Limitation Act.

15. In accordance with Accounting Standard 22 “Accounting for taxes on income” issued by the Institute ofChartered Accountants of India (“ICAI”), in view of substantial loss incurred by the Company during theperiod ended March 31, 2007 and large amount of unexpired unabsorbed depreciation and carry forwardlosses under the Income Tax Act, 1961, deferred tax assets on carried-forward losses and unabsorbeddepreciation have not been accounted for in the books, since it is not virtually certain whether the Companywill be able to utilize such losses/ depreciation.

16. Accounting Standard 17 “Segment Reporting” as issued by ICAI requires the Company to disclose certaininformation about operating segments. The Company is managed as a single operating unit that providesair transportation only and therefore, has only one reportable business segment. Further, the operations ofthe Company are limited within one geographical segment. Hence the disclosure required by this standardis presently not applicable to the Company.

17. Disclosure of details pertaining to transactions with related party entered into during the period and balancesas at March 31, 2007 in terms of Accounting Standard 18 Related Party Disclosures issued by the Instituteof Chartered Accountants of India, as Identified and certified by the Management:

A. Related Parties and their Relationship

Names of the related parties where control exists are as under:

(i) Entities exercising significant Royal Holdings Services Limited,influence Nevada, USA

(ii) Key Management Personnel Mr. Siddhant Sharma - Chairman

B. Transactions with related parties

Particulars Controlling Company Key ManagementPersonnel

Rs. Million Rs. Million

10 months Year ended 10 months Year endedperiod ended May 31, period ended May 31,

March 31, 2006 March 31, 2006 2007 2007

External Commercial 66.89 227.75 Nil NilBorrowings

ECB repaid during the year* 50.87 471.71 Nil Nil

Reimbursement of Expenses Nil 2.32 Nil Nil

Remuneration Nil Nil Nil Nil

Interest paid/Provided 19.83 16.74 Nil Nil

* Net of exchange fluctuation


C. Balances with Related Parties

Particulars Controlling Company Key ManagementPersonnel

Rs. Million Rs. Million

March 31, May 31, March 31, May 31,2007 2006 2007 2006

External Commercial 404.52 388.50 Nil NilBorrowings (ECB)

Reimbursement of Expenses Nil 2.32 Nil Nil

Remuneration Payable Nil Nil Nil Nil

Interest on ECB 27.92 13.28 Nil Nil

18. Accounting for Leases:

(a) Operating Lease Obligations

The Company has taken on lease aircraft, aircraft spares maintenance facilities and other propertyand equipment from third parties. Rental expense over the life of the lease amounts to Rs 14,897.48million as at March 31, 2007 (Previous Year Rs. 8,247.85 million). The Future lease obligation in thisrespect aggregates to Rs.12,013.89 million (Previous Year Rs. 7,430.44 million).

Details of future lease obligation are as follows:-(Rs. million)

Particulars March 31, 2007 May 31, 2006

Aircraft

Not later than 1 year 1,990.31 1,300.15

Between 1 to 5 year 6,134.92 3,933.68

Later than 5 years 3,414.63 2,061.44

Aircraft Spares

Not later than 1 year 114.35 17.78

Between 1 to 5 year 254.31 51.86

Later than 5 years 105.37 Nil

(b) Operating Lease Income

The company had given an aircraft (obtained on operating lease) to a party under an operating leaseagreement for a period of 4.07 months.(previous year 4.5 months) Lease rental / maintenance chargesrecognized in the profit & loss account amounts to Rs. 10.17 million (previous year Rs.5.65 million)which have been netted with lease rental / maintenance charges under operating expenses.


19. Earnings Per Share (EPS) :

Particulars 10 months Year endedperiod ended May 31, 2006

March 31, 2007

Number of Equity Shares outstanding at the beginning 184.34 154.47of the period (in million)

Number of Equity Shares issued (in million) 56.31 29.87

Number of Equity Shares outstanding at the end of the 240.65 184.34period (in million)

Weighted Average number of Shares (in million) 189.97 171.35

Net loss after tax (Rs. in million) 707.43 414.20

Basic and Diluted Loss Per Share (in Rupees) 3.72 2.42

20. Impairment of Assets

As on the Balance Sheet date the carrying amount of the assets net of accumulated depreciation is notless than the recoverable amount of those assets. Hence no impairment loss on the assets of the Companyhas been recognised.

21. Additional information pursuant to the provisions of Part II of Schedule VI to the Companies Act, 1956.

Particulars 10 months Year endedperiod ended May 31, 2006

March 31, 2007 (Rs. Million)(Rs. Million)

i) Expenditure in Foreign Currency(on cash basis)Professional & Consultation Fees 105.82 154.94Traveling 5.33 56.35Navitaire Usage Charges 54.04 22.06Maintenance Charges 138.77 79.42Lease Rent 1811.15 974.23Operating Expenses 54.92 39.27Bond issue expenses Nil 126.48Miscellaneous expenses 163.58 130.36

ii) Earnings in Foreign CurrencyPassenger Revenue Credit Cards 460.96 256.74Lease rentals 7.16 4.34Aircraft Maintenance Charges 3.01 1.31Reimbursement / credit from supplies / others 107.66 29.44Profit on sale and lease back 442.04 177.06

ii) CIF Value of ImportsCapital Goods (Software) 22.78 40.29Components and Spare Parts 42.00 39.89Rotables / galley equipments / tools 29.21 58.54

iii) Value of Components & Spare Parts % Value % ValueConsumedImported 85.59 45.71 71.00 22.53Indigenous 14.41 7.69 29.00 09.35Total 100.00 53.41 100.00 31.88


22. The Company has changed its accounting year end from May 31 to March 31 during the year. Accordinglythe current period represents only 10 months of operations as against 12 months of operations in theprevious year and to that extent figures in the Profit and loss Account and related disclosures for thecurrent period are not directly comparable with the corresponding figures of the previous year.

23. Previous year’s figures have been regrouped or reclassified wherever necessary to conform to currentyear’s classification.

Signatories to Schedules I to XVIII











PART IV

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

I. Registration DetailsRegistration No. State Code

17509 55

Balance Sheet Date

31 03 2007

Date Month Year

II. Capital Raised during the year (Amount Rs. Million)

Public Issue Right Issue

— —

Bonus Issue Private Placement

— 563.12

III. Position of Mobilisation and Deployment of Funds (Amount Rs. Million)

Total Liabilities Total Assets

9,906.74 9,906.74Source of Funds

Paid up Capital Reserves & Surplus

2,406.51 3,178.71

Secured Loans Unsecured Loans

3,571.82 749.70Application of Funds

Net Fixed Assets Investments

7,427.29 812.22

Net Current Assets Miscellaneous Exp.

(2,072.21) —

Accumulated Losses

3,739.64

IV. Performance of Company (Amount Rs. Million)

Turnover Total Expenditure

7,482.79 8,200.16

Profit/Loss Before Tax Profit/Loss AfterTax

(717.37) (707.43)

Earning per Share (Rs.) Dividend Rate %

(3.72) Nil

V. Generic Names of Three Principal Products/Service of theCompany (As per monetary terms)

Item Code No. 88024000

(ITC Code)

Product Description Domestic Airlines

Passenger and Cargo Services


CASH FLOW STATEMENT FOR THE 10 MONTH PERIOD ENDED MARCH 31, 2007

PARTICULARS 10 MonthPeriod Ended Year ended

March 31, 2007 May 31, 2006


A. CASH FLOW FROM OPERATING ACTIVITIES

Loss before tax (663.82) (459.76)

Adjustment for :

Depreciation 58.47 81.58

Deferred revenue expenditure written off 20.73

Asset Write Off 0.36 0.15

Impact of changes in accounting policies

Leasehold improvement to aircrafts written off 69.70

(Refer Note 6 in schedule XVIII)

Deferred revenue expenditure written off 93.78

(Refer Note 6 in schedule XVIII)

Provision for cenvat receivable 38.12

Interest Income (68.92) (19.37)

Interest Expense 27.31 19.66

Dividend Income (3.79) —

Prior Period

Fringe Benefit Tax

Write Back of Old Creditors (186.25)

Foreign Exchange Fluctuation (Loss/Gain) (51.40) 11.67

Profit from sale of aircrafts (442.04) (168.92)

Operating Loss before Working Capital changes (1,128.48) (514.26)

Adjustment for :

Trade and other Receivables (18.40) (16.12)

Inventories (45.43) (15.95)

Loan and Advances (414.00) (120.65)

Margin money deposit (276.61)

Current Liabilities 384.33 825.12

Provisions 29.87 4.50

Cash used in Operations (1,468.72) 162.64

Direct Taxes (20.00) (14.19)

Cash (used) in operating activites (A) (1,488.72) 148.45

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (121.52) (391.05)

Net Proceeds on Purchase and Sale of Aircrafts 1,798.76 (2,984.06)

Deferred revenue expenditure paid during the year — (96.12)

Investment in Securities (812.22)

Interest Income 68.92 12.17

Dividend Income 3.79


PARTICULARS 10 MonthPeriod Ended Year ended

March 31, 2007 May 31, 2006


Cash generated from/ (used) in investing activities (B) 937.73 (3,459.06)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issue of Share Capital 2,924.39 589.21

Proceeds from fresh secured loans 100.00 3,596.40

Repayment of secured loans (15.38)

Proceeds from external commercial borrowings 66.89 227.75

Repayment of external commercial borrowings (50.87) (471.71)

Net increase/ (decrease) in temporary working capital limits 138.15 (261.86)

Interest Paid (12.67) (24.58)

Cash generated from financing activities (C) 3,150.51 3,655.21

D. NET INCREASE IN CASH AND CASH EQUIVALENT (A+B+C) 2,599.52 344.60

Opening Balance of Cash and Cash Equivalent 634.32 289.72

Closing Balance of Cash and Cash Equivalent 3,233.84 634.32

Cash and cash equivalent comprises of

Cash In Hand 7.48 6.39

With Scheduled Banks

In Current Account 138.17 163.19

In Fixed Deposits 3,104.42 479.19

With other banks 0.44 2.22

Less - Provision (16.67) (16.67)

Total 3,233.84 634.32











Ple

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Cut

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SpiceJet LimitedRegd. Office : Cargo Complex, Indira Gandhi International Airport, Terminal-I, New Delhi-110037

ATTENDANCE SLIPTwenty Third Annual General Meeting

SpiceJet LimitedRegd. Office : Cargo Complex, Indira Gandhi International Airport, Terminal-I, New Delhi-110037

PROXY FORM

DPID*

Client ID*

I/We of

being a member/members of SpiceJet Limited hereby appoint

of or failing him

of as my/our proxy to vote for me/us on my/our behalf at the Twenty Third Annual General Meeting of the Company to be held on September11, 2007 and at any adjournment thereof.

Signed this day of 2007

Master Folio no.

No. of Shares

Note : This form in order to be effective should be duly stamped, completed and signed and must bedeposited at the Registered Office of the Company, not less than 48 hours before the commencement of theAnnual General Meeting.

*Applicable for investors holding shares in electronic (dematerialised) form.

DP Id* Master Folio no.

Client Id*

Affix a30 ps.

RevenueStamp

Signature

I certify that I am a registered shareholder/proxy for the registered shareholder of the Company.

I hereby record my presence at the Twenty Third Annual General Meeting of the Company at 12.00 noon onSeptember 11, 2007.

Member's/Proxy's name in Block Letters

Father's Name

Member's/Proxy's Signature

Note : Please fill in this attendance slip and hand over at the ENTRANCE OF THE VENUE.

If undelivered please return to :

SpiceJet LimitedSpiceJet LimitedSpiceJet LimitedSpiceJet LimitedSpiceJet LimitedCorporate Office :Corporate Office :Corporate Office :Corporate Office :Corporate Office :319, Udyog Vihar, Phase-IV,319, Udyog Vihar, Phase-IV,319, Udyog Vihar, Phase-IV,319, Udyog Vihar, Phase-IV,319, Udyog Vihar, Phase-IV,Gurgaon-122 016 HaryanaGurgaon-122 016 HaryanaGurgaon-122 016 HaryanaGurgaon-122 016 HaryanaGurgaon-122 016 Haryana P

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U.P.C.

annual report 2006-07

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